(Bloomberg) -- Bank of England rate-setter Jonathan Haskel warned that the “very tight” labor market is loosening only slowly and will be the key to bringing down inflation.

In a speech in London Tuesday, he said that the vacancies to unemployment ratio is falling “rather slowly” and that the persistence of UK inflation will depend on its strength going forward.

His comments leave him in the hawkish camp on the BOE’s Monetary Policy Committee who are warning against turning to interest rate cuts too soon. While he, along with the others, have withdrawn their support for further hikes, Haskel has said that rate cuts should be “a long way off.” 

Official data has shown some early signs of the labor market loosening but unemployment still remains low and wages are rising rapidly at 6%. Closely watched PMI figures published earlier Tuesday showed firms boosting hiring by the most in nine months in April as the economy’s recovery from recession picked up pace.

“We had a very tight labor market and we still have very tight labor market,” Haskel said in an event at the Bayes Business School. “My view is the labor market is central to the inflation aspect.”

At the peak of labor shortages, there was one job vacancy for every unemployed person in Britain. That has eased to around 0.6 vacancies for every jobless Briton but remains much higher than the average in the decade before the pandemic.

Markets have pushed back bets on the start of the BOE’s hiking cycle in recent weeks after fears the UK will suffer a resurgence in price pressures similar to those seen in the US. Traders expect two quarter-point reductions by year-end, with small odds of a third.

In an examination of the causes of UK inflation, Haskel said that double-digit price growth was largely due to shocks from energy prices, food costs and a tight labor market rather than loose central bank policy.

“Where we are going depends strongly on V/U [the vacancies to unemployment ratio] and the labor market,” he said. “Interestingly though, [inflation] expectations have remained remarkably anchored.”

Haskel added that “unusually high” food price rises had been “very important” to fueling inflation.

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