Core Viewpoint - The Governor of the Bank of England, Bailey, indicates that wage growth in the UK is still far from normalization, with companies responding to higher employment taxes by laying off workers and cutting wages rather than raising prices [1] Group 1: Employment and Wage Trends - Increasing evidence suggests that UK businesses are addressing higher employment taxes through layoffs and wage reductions instead of price increases [1] - Bailey welcomes signs of a loosening labor market and a slowdown in wage growth, indicating a potential shift in employment dynamics [1] Group 2: Inflation Concerns - The rise in employment taxes implemented by the government in early April raises concerns among Bank of England policymakers about potential inflation rebound and long-term inflation risks [1] - Despite the new tax, Bailey notes that it does not seem to have driven up prices, with more adjustments being made through wages and employment [1] Group 3: Monetary Policy - The key interest rates need to remain tight to ensure the ongoing trend of wage and employment adjustments continues [1]