The inflation impact of higher wages will be reduced further by a pick up in workers’ productivity, but that is something the Bank has been predicting almost since the start of the crisis.All these pieces need to come together for Britain to enjoy strong growth and low inflation, which would enable gradual and limited monetary tightening. Yet the BoE like many others has struggled to forecast labor market trends over the past year, failing to predict the big fall in unemployment.

“It could be that their earnings numbers translate into stronger cost increases than the BoE thinks. In that case, the pace of (rate) increases would be greater, without any doubt at all,” said Brian Hilliard, chief UK economist at Societe Generale.Another risk is that the BoE has to raise rates to curb risks from house prices, which have jumped 10 percent in a year.



This would be a last resort for the central bank, which has said it wants to stop household debt from reaching dangerous levels by imposing curbs on how much banks can canada goose sommerjakke lend canada goose sort jakke and to whom.But the track record of such controls in other countries is mixed. They often put only a temporary brake on rises in house prices especially when, as in Britain, planning rules make it hard to build new homes to meet demand. canada goose jakke shelburne [ID:nL6N0O540L]Sentance, who now advises accountants PwC, said the best way to stem such risks would be to raise rates now, and that some firms he speaks to are worried about the policy outlook.