The U.K.'s unemployment rate fell to a 5-year low of 6.8% in Q1, says the Office for National Statistics today, giving more fuel to those calling on the Bank of England to hike rates. "Record low interest rates are increasingly unnecessary,” says Rob Wood, an economist at Berenberg Bank and a former BOE official.
The BOE, however - in its May inflation report released after the unemployment print - acknowledges the rebounding economy, but says more slack needs to be absorbed and reiterates its low-rate pledge. The outlook for inflation in the medium-term remains benign, says BOE Governor Mark Carney.
The pound slips vs. the dollar, down 0.25% and buying $1.6786.