Borrowing costs rose again yesterday as worries about rising wages and inflation cast fresh doubt over the pace of interest rate cuts this year amid fears of ‘stagflation’.
In another potential setback for Rachel Reeves, official figures today are set to show inflation accelerated last month having hit 2.5 per cent in December.
The Office for National Statistics report comes just a day after separate figures showed private-sector wages were 6.2 per cent higher in the final quarter of 2024 than a year earlier.
It was the biggest increase in a year and underscored why the Bank of England has been cautious about cutting interest rates. The yield on ten-year gilts – a key measure of government borrowing costs – rose above 4.58 per cent.
The Bank’s monetary policy committee (MPC) cut rates only twice last year and again this month – from 4.75 per cent to 4.5 per cent – but it remains unclear how many more reductions will follow.
Thomas Pugh, economist at RSM UK, said: ‘These pay growth numbers will make the MPC nervous.’
Rising costs: In a potential setback for Rachel Reeves (pictured), official figures tare set to show inflation accelerated last month having hit 2.5%in December
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
This article was originally published by a www.dailymail.co.uk . Read the Original article here. .