BoE's Greene: Signs of labor market stabilising

BoE's Greene: Signs of labor market stabilising

BoE’s Greene: Signs of Labor Market Stabilizing

Bank of England policymaker Megan Greene has highlighted emerging signs of stabilization in the UK labor market, though she remains cautious about supporting further interest-rate cuts without stronger evidence of weakening demand. In recent remarks, Greene noted that employment and vacancies data have shown “stabilization,” suggesting the labor market may no longer be in a phase of sharp adjustment. This aligns with recent data from the Office for National Statistics (ONS), which reported a rise in the unemployment rate to 5.2% in the final quarter of 2025—a five-year high—and a slowdown in private-sector wage growth to 3.4%, the lowest level in over five years.

Greene emphasized that while vacancies have “leveled out” and underlying employment growth remains positive, further deterioration in the labor market would be necessary to justify additional rate cuts. Her stance reflects broader concerns within the Bank of England’s Monetary Policy Committee (MPC), which has closely monitored wage growth as a key inflation indicator. Annual wage growth, excluding bonuses, fell to 4.2% in late 2025, down from 4.4% in November, signaling easing inflationary pressures.

Despite these developments, Greene remains in the MPC’s hawkish camp, having opposed the August 2025 rate cut. She cited the need for more pronounced labor market weakness and a weaker-than-expected recovery in consumer spending to shift her position. Meanwhile, recent economic forecasts from the BoE have revised 2026 growth projections downward to 0.9%, with unemployment expected to reach 5.3% by spring.

Investors are currently pricing in a 90% probability of a rate cut by April, supported by softer inflation data and slowing wage growth. However, Greene’s cautious approach underscores the MPC’s balancing act between inflation control and economic stability as it prepares for its next policy decision on March 19. According to Bloomberg, the MPC is closely monitoring labor market conditions ahead of the March meeting.

(https://www.reuters.com/sustainability/sustainable-finance-reporting/uk-wage-growth-slowed-end-2025-ons-says-2026-02-17/): Reuters, 2026-02-17
(https://www.bloomberg.com/news/articles/2026-02-17/uk-unemployment-rate-climbs-to-5-year-high-wages-cool): Bloomberg, 2026-02-17
(https://www.bloomberg.com/news/articles/2025-12-01/boe-s-greene-says-more-jobs-weakness-needed-to-back-rate-cut): Bloomberg, 2025-12-01