Bank of England will delay interest rate rise if wages don't go up

Wages hold the key to when interest rates will start rising. That much is clear from the minutes of the most recent meeting of the Bank of England's monetary policy committee (MPC) and the speech by its governor, Mark Carney, in Glasgow on Wednesday.

Put simply, Threadneedle Street is struggling to explain what is happening in the economy. Growth is stronger than it envisaged when Carney became governor just over a year ago and unemployment is a lot lower at 6.5%. That would normally be consistent with a faster rate of earnings growth because employers have to offer higher pay to attract workers. Indeed, that is precisely what is happening in the US, where a tighter labour market is starting to lead to stronger earnings growth.