Arguably, the UK monetary policy debate will hinge more critically on developments in the labor market. The latest set of data are forecast to provide further evidence that the UK labour market continues totighten. Lloyds Bank sees a fall in the unemployment rate to 5.6% alongside some modest acceleration in underlying wage growth, though volatility in the timing of bonus payments could mean that improvement in headline pay growth could be deferred to the coming months. This expected pickup suggests that the Bank of England will increasingly face a policy dilemma as the year progresses.
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