Expectations are rising that the Bank of England will cut its benchmark interest rate next month after wage growth slowed to its slowest pace in two years.
Data from the Office for National Statistics showed pay growth excluding bonuses was 4.9% in the three months to August, down from 5.1% in the quarter to July. 
The central bank's rate-setting Monetary Policy Committee said it wants wage growth and services inflation to remain below 5% for most of this year.
The committee's last two meetings of the year are scheduled for November 7th and December 19th, and the market expects the committee to raise interest rates at least once to 4.75% from the current 5% level. I expect it to drop.
Lindsay James, investment strategist at Quilter Investors, said:
“With only a few weeks until the next Bank of England rate announcement, today's numbers, along with last week's gross domestic product (GDP) data and tomorrow's inflation rate, will play a key role in the Monetary Policy Committee's decision-making. .
“Labour's first budget (on October 30) is also expected to be passed before the central bank's Monetary Policy Committee meeting, and the central bank will closely monitor market reaction and the potential economic impact.”
Overall, the unemployment rate fell to 4% in the three months to August from 4.1% in the quarter to July.
Susannah Streeter, head of finance and markets at Hargreaves Lansdown, points out:
“Average earnings growth, including bonuses, has fallen to 3.8%, a very significant decline considering that salary growth has slowed rapidly in recent years.”
Streeter added that the move “increases expectations for a rate cut in November, with further rate cuts likely in December.”
