Regular pay growth was the strongest in May in almost three decades and suggests that we may have underestimated the influence the stellar result from this year’s annual spring wage negotiations will have on wage growth. If the recent strength in wage growth were to be sustained, that would bolster the case for tighter monetary policy. But given the Bank’s unwillingness to risk snuffing out any nascent virtuous cycle, we still don’t think a policy pivot is on the cards.
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