Unemployment a Thorn in BOE’s Side

Bank of England officials’ quest to understand the strength of Britain’s labor market will take on greater urgency this week if unemployment keeps falling as fast economists predict.

The jobless rate declined to 7.3 percent in the three months through November, economists said before a report tomorrow, bringing it even closer to the 7 percent threshold at which officials have said they will review borrowing costs. That may add pressure on the MPC to reassess its guidance policy, even as it seems no closer to understanding the reasons for the labor market’s health.

The puzzle of productivity and payrolls bedeviling U.K. economic analysis is a “perennial problem,” Monetary Policy Committee member Ben Broadbent said last week. An insight into the debate will be revealed tomorrow when minutes of the MPC’s January meeting are also published. Officials previously acknowledged a “range of views” on the matter.


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