Fall in job vacancies across sectors needs to go further

The recent decline in the number of job vacancies suggests that the upward pressure on wage growth from labour shortages is probably past its peak. But it’s still not clear that wage growth will slow fast enough to ease the Bank of England’s concerns over the strength of domestic inflation. We think Bank Rate will need to rise further from its current level of 4.50% to a peak of 5.25% to reduce demand in order to cool the labour market and bring inflation down to the 2.0% target.