Above: File image of Jonathan Haskel. Image copyright: Pound Sterling Live, Still Courtesy of Imperial College Business School.
Jonathan Haskel is the latest member of the Bank of England to warn there is no prospect of a rate cut over the coming months as the UK's labour market remains too "tight".
Haskel told an audience at the University of Warrick that the still-high degree of labour market tightness continues to impart inflationary pressures on the economy.
"This will need higher rates for longer to get inflation sustainably to target. This is why I have been voting for higher rates at recent meetings," he said.
Haskel presented new research on how previous shocks - namely the energy shock and pandemic - fed into surging inflation.
But, crucially, the shocks also altered the UK labour market, making it less efficient in filling available vacancies in the country's businesses.
"The matching efficiency of the labour market appears to have been impaired since the pandemic, “tightening” the labour market," says Haskel.
This meant wage pressures have risen and remain high, high enough to ensure UK inflation rates won't fall to 2.0% anytime soon.
"Does the current outlook suggest scope for moderation in rates anytime soon?" asks Haskel.
"No. The labour market is still historically tight. At current rates of change it would take at least a year to fall back to average pre-pandemic tightness, with the precise time depending critically on the greater the degree to which matching in the labour market has been impaired," he answers.
Haskel also reflects that productivity growth in the UK remains in the doldrums, putting upward pressure on costs.
"Rates will have to be held higher and longer than many seem to be expecting," he says.
Haskel's comments follow those of Bank of England Governor Andrew Bailey, who on Monday warned the market was misguided to expect significant rate cuts in 2024 as the task of bringing inflation down was ongoing.
Bank of England Deputy Governor Dave Ramsden said in a television interview on Tuesday that UK inflation is becoming more "home-grown" and will be “challenging to squeeze out of the system."
Ramsden said monetary policy would have to stay "restrictive for an extended period of time".