Minimum Wage Hike May Keep Inflation High, Say Economists

An almost 10 percent rise in the minimum wage could result in a longer wait for the Bank of England (BoE) to reduce interest rates and slow the predicted fall in inflation, economists have warned. “The fear is that the rise this year will contribute to stickier wage growth and inflation,” said economist Ashley Webb from consultancy firm Capital Economics on Monday. The BoE’s Monetary Policy Committee (MPC), which is responsible for formulating monetary policy, also indicated it wants to see wage growth cooling before it cuts interest rates from 5.25 percent. “Following accusations that policymakers were behind the curve in tightening policy when inflation was heading up, the MPC may well decide it’s appropriate to exercise further caution in bringing rates down,” said Chief Economic Adviser Martin Beck from the EY Item Club, an economic forecasting group....