Wednesday preview: UK jobs data, Federal Reserve meeting minutes

UK jobs data on Wednesday will be scrutinised carefully by the Bank of England after the central bank underscored weak wage growth in its latest Inflation Report.

The Office for National Statistics is expected to reveal average weekly earnings rose 1.9% year-on-year in the three months to December, compared to 2% growth in the previous quarter.

In early February the BoE cut its forecast for wages this year in the Inflation Report, saying that growth had “eased significantly" more than anticipated. The central bank now expects average weekly earnings to increase by 3% this year, down from the 3.75% it predicted three months ago.

The BoE took a slowdown in wage growth into account in deciding to keep interest rates unchanged this month.

On a brighter note, the labour market report is forecast to show the unemployment rate fell to 5.0% in the three months to December from 5.1% previously.

UK employers may have added 225,000 jobs during the period, compared to 267,000 the prior three months, according to analysts’ estimates.

Jobless claims in January are projected to have fallen 3,000 while the claimant count is predicted to have risen 2.3% last month.

Meanwhile, the Federal Reserve releases the minutes of its 26-27 January policy meeting when the central bank decided to hold interest rates steady.

The minutes may provide clues on the next change in interest rates after raising the benchmark rate in December for the first time in nearly a decade.

Fed chair Janet Yellen last week left the door open to negative interest rates in a testimony to the Senate Banking Committee amid concerns about the health of the global economy.

"In light of the experience of European countries and others that have gone to negative rates, we're taking a look at them again, because we would want to be prepared in the event that we would need (to increase) accommodation,” Yellen said.

“We haven't finished that evaluation. We need to consider the institutional context and whether they would work well here. It's not automatic.”