Turning labour market should give Bank of England pause for thought

Commenting on this morning’s release of labour market statistics, that showed the rate of unemployment rising to 3.7% in the three months to October and vacancies falling for the fifth successive month, Kitty Ussher, Chief Economist at the Institute of Directors, said:

“The labour market has now turned. While unemployment is still, thankfully, very low by historical standards, it has started to march upwards.

“The Bank of England therefore needs to pause for thought before continuing its aggressive path of interest rate rises. When the medicine is starting to work it can be reckless to keep increasing the dose.

“On balance a slight and cautious rise on Thursday is probably justified until it becomes clear that inflation is on a firm downwards path. However, anything more would risk over-shooting their medium-term target leading to unnecessary pain among those seeking work to raise their household incomes.”