Strong Wage Growth Supports UK Government Bond Yields, Whether to Raise Interest Rates by 50 Basis Points in August Depends on CPI

Record wage growth in Britain kept the Bank of England on track for a 50 basis point rate hike at its next policy meeting and helped support short-term government bond yields.
The average annual rate of British wages excluding bonuses recorded 7.3% in the three months of May, beating expectations of 7.1% and unchanged from the previous month’s revised value.
Bank of England Governor Bailey has previously said that wage growth at this level is fueling inflation.
Markets are already pricing in a 50 basis point rate hike from the Bank of England when it meets in August, and today’s data is unlikely to undo those bets.
Whether policymakers decide to raise rates another 50 basis points may depend on inflation data due next Wednesday.
Talk of the BoE raising its inflation target has also been circulating recently, but Bailey dismissed the idea over the weekend, saying it could damage the BOE’s credibility and undermine expectations.