Just when he thought the worst was over on interest rates… well it really isn’t.
Today’s remarkably strong wages data explain a lot. Not least why the UK economy has refused to tip into recession. With wages rising at about 8% and unemployment still little more than 4% there is too much demand sloshing around the system for GDP to contract.
But that may not be as good news for Rishi Sunak as he thinks. The reckoning is coming, but it is probably simply being pushed ever closer to the date he has to press the button on an election in just over a year’s time.
For the Governor, today’s data means he and his fellow MPC members have no realistic option other than to keep up the task of making borrowing money ever more expensive to dampen down the hot spots in the economy.
The Bank simply cannot afford to let wages get out of control, particularly with the “triple lock” benchmarking of next year’s state pensions looming in September.
So it seems likely that regardless of tomorrow’s expected sharp fall in headline inflation the Governor will wearily keep having to feed the nation the unpleasant interest rate medicine for months to come yet.
Despite the tick up in unemployment there are still skilled labour shortages and staff retention remains a key concern.
Only when employers can pick and choose who they want to hire will the balance of power in the jobs market shift and wage growth subside. But that means inducing far higher unemployment and in all probability — a recession.