New BoE rate-setter Haskel focuses on weak wage growth, sterling falls

By David Milliken and Andy Bruce

LONDON (Reuters) - New Bank of England rate-setter Jonathan Haskel said on Tuesday he expected wage pressure, a determining factor in the outlook for British interest rates, to remain weak, in comments that sent sterling lower against the dollar.

Haskel, a professor from Imperial College in London, said it would be premature to express a firm view on the path for rates, but that he agreed with the "broad direction of travel" of the BoE's guidance that rates would probably need to rise.

Still, his comments pushed sterling down to a day's low as investors judged Haskel's tone to be more cautious than Monetary Policy Committee member Ian McCafferty, a long-time advocate of higher rates whom Haskel replaces in September.

Haskel, a productivity expert, cited theories that high under-employment of workers can explain why wage growth has failed to take off as the BoE has long expected, despite the lowest unemployment rate since the mid-1970s.

"I think it's an urgent priority to look at that, there are a lot of arguments in favour of that view," Haskel told lawmakers during an appointment hearing.

He also said gauging the amount of slack in the labour market was difficult given the huge variety of jobs on the market.

"All of this I think is in favour of the notion that there may well be much more slack than we think," he said.

Haskel also said Britain's economy risked a "temporary lull" if Brexit negotiations went badly.

Haskel will serve a three-year term as an external member of the nine-strong Monetary Policy Committee starting on Sept. 1.

(Additional reporting by Anu Shukla, writing by Andy Bruce; editing by John Stonestreet)