Speaking at the launch of the report, Bank of England governor Mervyn King stated (PDF format, 23.9K) (external website) that interest rates are expected to run at "a little below 3% over the next year or so".

However, acknowledging the unpredictable nature of what he termed "these exceptional and difficult times", King added the following caveat:

...there are very few historical parallels to the present set of circumstances. So the
uncertainty surrounding the projections in today's report is unusually large.

The report includes an interesting overview of the latest developments in pay awards, drawn from a number of authoritative sources including our own regular IRS analyses of pay trends (subscription required).

It notes that growth in private sector wage settlements "has remained broadly unchanged since mid-2007". However, recent data suggest that pay growth is starting to slow, with the proportion of pay freezes having risen in the third quarter of 2008.

Looking ahead, the report suggests that:

...pay pressures more generally are likely to ease further in the months ahead as the labour market continues to loosen.

• Has your organisation recently carried out an annual pay review? If so, and if it has now been settled, please get in touch so that we can add your organisation's pay award to the IRS database.