British firms' wage growth expectations cool slightly, BoE Survey shows

LONDON, Feb 5 (Reuters) - British ⁠employers' expectations ⁠for ‍wage growth cooled a bit further in January, according to a survey published by the Bank ‍of England which is looking out for further ​signs of a slowdown in pay rises before it next cuts ​borrowing costs.

Expected year-ahead wage growth dropped by 0.1 percentage points to 3.6% on a three-month moving-average basis in January, the joint-lowest reading since ​the series started in 2022, the Monthly Decision Maker Panel survey showed on Thursday.

Companies' expectations for how ​much they will raise prices in the coming 12 months also inched down ‌slightly, falling by 0.1 percentage points to 3.5% in the three months to January.

The BoE held ​interest rates at 3.75% on Thursday, ⁠and financial markets are pricing in one or two quarter-point cuts in 2026.

While Britain's headline ‌rate of inflation rose to 3.4% in December, the central bank said there was scope for further reductions to borrowing ‌costs this year if an expected sharp fall in inflation from April ‌proved persistent.

The DMP survey showed companies' expectations for inflation in the economy as a whole over the year ahead decreased to 3.2% ‍in the three months to January from 3.4% in the three months to December.

Businesses also ⁠said they expected to reduce employment levels by 0.2% over the next year, compared with a 0.4% fall that was expected in December's survey.

(Reporting by Suban Abdulla; editing by Andy Bruce and David Milliken)

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