On June 11, the UK Office for National Statistics reported that the UK's unemployment rate for the three months ending in April rose to 4.4%, the highest level since mid-2021. This figure exceeds economists' consensus expectations and is up from 4.3% in the previous quarter.

The report also stated that the inactivity rate of the unemployed population in the UK rose again, with as many as 22.3% of the working-age population considered not actively seeking work.

If the report had only revealed this, the Bank of England might consider lowering interest rates next week.

However, who would have thought that despite the high unemployment rate, wage growth for UK workers remains strong, with the annual growth rate of regular wages reaching 6%, continuing to outpace the inflation rate.

For the general public, rapid wage growth is good news, but for the Bank of England, it is clearly "bad news." Such high wage growth, combined with the strong spending power of the British people, will severely limit the Bank of England's willingness to cut interest rates. If liquidity is increased at an inappropriate time, the UK economy could even fall back into the mire of inflation.

Sure enough, after the data was released, the money market immediately priced in a reduction in the likelihood of the Bank of England cutting interest rates at the next meeting to 10%.

Analysts say the current situation is quite complex for the Bank of England. On one hand, the bank wants to see more evidence that inflation is gradually cooling (the rise in the unemployment rate is a good piece of evidence), but on the other hand, the persistent wage growth is the biggest obstacle to the bank's reluctance to cut interest rates.

Market analysis is also generally consistent, not expecting the Bank of England to cut interest rates at the next meeting.

KPMG's Chief Economist Yael Selfin believes that today's "mixed labor data is unlikely to change the Bank of England's decision this month." "The rise in the unemployment rate is due to insufficient job positions and delayed hiring by companies. From a macro perspective, companies are preserving their existing workforce. On the other hand, the rise in the unemployment rate can also be interpreted as companies expecting future economic activity to pick up, so they are making more use of their existing employees."

Matthew Ryan, Market Strategist at global financial services firm Ebury, also believes that hopes for a rate cut before the general election are dashed: "After the data was released, the pound remained basically stable. Although rapid wage growth may delay the Bank of England's start of rate cuts, the rise in the unemployment rate is a bad sign for the UK's economic growth prospects. This is not particularly welcome news for the Conservative Party led by Sunak, who seem to be calling for an early election based on the recent strong economic data."

Thomas Pugh, an economist at RSM UK, said that the Bank of England's Monetary Policy Committee (MPC) should cut rates in August: "Today's data will make the MPC very uncomfortable. But it is clear that the labor market is loosening, forward-looking indicators show that wage growth will slow, and combined with the further decline in inflation in May, this should be enough to justify the Bank of England following the European Central Bank in cutting rates in August."

Richard Carter, Head of Fixed Income Research at Quilter Cheviot, believes that the central bank will trigger a new round of inflation by cutting rates too early. He said that the spending power of UK consumers is high, and cutting rates too early will plunge the UK back into the mire of inflation. He believes that today's data will continue to suppress the possibility of a rate cut in June or August, while November remains the most likely date for the first rate cut.

The Bank of England's next rate decision will be announced on June 20.