LONDON (Reuters) - Britain’s fourth quarter productivity data are likely to be “abysmal”, Bank of England Monetary Policy Committee member Kristin Forbes said on Tuesday, although she stressed the underlying trends were more important than a single data point.
“It looks like fourth-quarter productivity growth is going to be abysmal. That’s part of the trade-off of strong employment growth with moderate overall GDP growth,” she said at a meeting of the Henry Jackson Society think tank at Britain’s parliament.
Forbes said that productivity developments would be key to her decision on when to vote to raise BoE interest rates for the first time since the financial crisis. Weaker productivity would require an earlier interest rate rise.
In a speech to the society, released on Monday, Forbes said she believed there was little spare capacity in Britain’s labour market, but that the recent slump in oil prices allowed the central bank the luxury of time to check that the tight job market was raising wages.
Reporting by William James and David Milliken