Lombardelli sees case for further rate rise if inflation persists
Bank of England policymaker Clare Lombardelli sees a case for another near-term rate increase unless inflation pressures weaken. She warned that weaker hiring and declining job mobility may limit the wage restraint from higher unemployment.
Energy costs strengthen tightening case
Lombardelli backed the Monetary Policy Committee's 8–1 decision to raise Bank Rate by 25 basis points to 4.0 percent at its previous meeting.
Speaking at the Bank of England Watchers Conference, she said the energy shock had become larger and more persistent since July.
Stronger household spending and business activity had limited the disinflationary effect of weaker demand, while energy costs increased direct, indirect and second-round inflation risks.
She judged inflation risks to remain tilted upward and supported another near-term increase absent evidence of weaker price pressures.
Her view remains conditional on pricing, activity, spare capacity and energy data; uncertainty favours gradual adjustment toward the 2 percent inflation target.
Fewer openings hit young workers
UK unemployment stood at 4.7 percent in the three months to August, with weaker hiring rather than redundancies driving the slowdown.
Quarterly job switching has fallen from above 3 percent thirty years ago to just above 2 percent over the past year.
People aged 16–24 represent around 12.5 percent of the labour force but account for more than half the unemployment increase since mid-2022.
Vacancies are around 14 percent below pre-pandemic levels, including declines of 19 percent in accommodation and food services and 46 percent in retail.
Job stability masks matching problems
Lombardelli warned that poor job matching can leave unemployment less effective at restraining wages.
Lower mobility also weakens productivity and workers' capacity to adapt to AI.
She does not judge equilibrium unemployment to have changed materially, but will test whether further joblessness eases pay pressure.