📝U.K. Labour Market Inflationary Pressures Underestimated: J.P. Morgan

October U.K. inflation numbers sit uncomfortably alongside the message sent from the Bank of England in its last meeting, when it argued that only modestly higher interest rates would be necessary to bring inflation back towards its 2% target.

What has been underestimated consistently has been the inflationary pressures stemming from the tight labor market.

See BoE rates peak at 4.5%. Until it is clear weaker activity is starting to weigh on wage demands, we believe the Bank of England will have to keep hiking. - J.P. Morgan Strategy