UK jobs and wage data have strengthened the case for Bank of England rate hikes, with wages excluding bonuses rising faster than expected and the previous month’s reading revised higher. Payrolled employees increased for a second month in September by the most since August 2025, signaling labour market improvement.
Bank of England members highlighted last week that risks of second-round inflationary effects from the US-Iran war are mounting, supporting multiple rate hikes. A stronger labour market also eases concerns that tightening too far or too fast could harm the economy.
A hike at the November 5 MPC meeting is nearly fully priced, while bets on further tightening by year-end and into next year are creeping higher. This may pressure shorter-dated gilt yields ahead of Chancellor John Healey’s first budget.
Wednesday’s CPI data is expected to show annual inflation at a nine-month high, with core and services inflation also forecast to rise, potentially driving clearer pickup in interest rate expectations and borrowing costs.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing