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Carney urged to set rates in line with wages

The head of the UK’s trade union movement has urged Bank of England governor Mark Carney to keep interest rates low until workers’ pay improves

The Financial Times reports Trade Union Congress general secretary Frances O’Grady made the request on rates at a private meeting with Carney.

She says: “What working people will want to hear is him committing himself to taking judgements based not just on the economic recovery but also on the recovery in people’s pockets.

“I think people would like to hear him promise that we’re not going to see a rise in interest rates that could harm or potentially choke off recovery until we are seeing a repairing of people’s household finances too.”

Carney will speak at the TUC annual conference on Tuesday. 

Figures published by the Office for National statistics in May showed year-on-year wage growth of 1.7 per cent.

Wage growth has been below inflation for the majority of the period since the financial crisis.  

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There are 2 comments at the moment, we would love to hear your opinion too.

  1. It sounds good but its economically illiterate. Nearly as gormless as Carney linking interest rate uptick triggers to unemployment. The long run neutral position of interest rates is price inflation – interest should maintain the value of deferred spending.

    You do get the impression people just want to name a number, but rather than appearing to pluck the number from the air, if you can find a statistic that is currently at that number then it creates an air of respectibility. If interest rates should be 6% at some point, why don’t we link rates to the number of eggs most commonly found in boxes?

  2. I have every respect for the TUC especially after visiting the people’s museum in Manchester and getting the facts on the Peterloo massacre. Quite fascinating and equally horrific. Hence my respect for the unions and their origins. However when these sort of things come up the unions do themselves a disservice. In principle it makes a good (simplistic) soundbite. In practice its lunacy and throws economic theory out the window.

    In case the TUC have not real figured it out, the next few decades are going to see huge population growth across the globe with a fixed amount of resources available. The demand for those resources is going to cause major problems for all future generations. Fixing interest rates to low wages is nonsense compared to the economic challenges we face. Maybe the TUC should focus their efforts on this issue rather like Milliband on soundbite politics.

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