Some 1,600 members of the Bank's staff got an average pay rise of 4 per cent from 1 March, according to pay researchers Incomes Data Services. This consisted of a merit pay rise of 1.75 per cent on top of a basic pay deal of of 2.25 per cent, compared with headline inflation of 2.1 per cent in the year to March. Some got additional performance bonuses.
The 140 information technology staff won even better deal. Their pay went up by an average of 8.25 per cent, with performance bonuses worth 12 per cent on top. It is the third year in a row that the IT staff have received high pay awards, with huge demand for computer experts in the financial sector in the run-up to the launch of the euro last New Year, and with next New Year's millennium bug problem still to be ironed out.
Earlier this week the Chancellor, Gordon Brown, told delegates at the annual dinner of the Confederation of British Industry: "All of us must show responsibility on pay, and not take the short-termist approach of paying ourselves more today at the cost of higher interest rates, fewer jobs and slower growth tomorrow."
The Bank has shed some 500 jobs in the past two years, reflecting the enormous restructuring it has undergone since it gained its independence two years ago. So it could be argued that productivity gains make up for the above-inflation increases in earnings.
But the pay deal illustrates exactly the difficulty the Bank's Monetary Policy Committee (MPC) has to face as it sets interest rates each month. The jobs market, certainly in London and the south east, is currently very tight.
According to official figures, average earnings for the country as a whole rose 5.1 per cent in the year to February, and by 5.5 per cent in services. By the standards of banks in the City of London, Bank of England pay levels are very modest.
Indeed, the Bank has recently advertised for economists, with a large number of jobs currently vacant. The Treasury, too, has had difficulty luring enough economists to work for public-sector levels of pay when the main attraction is that academic salaries are even lower.
If anything does drive the committee of nine experts who meet in Threadneedle Street to raise the cost of loans in the next few months, it will be further signs of wage pressure. The Bank's Inflation Report has signalled that earnings growth of about 4.5 per cent is as high as it thinks consistent with meeting the inflation target. Any higher, and improved productivity can not make up for the above-target pay rises.
According to the minutes of the latest MPC meeting, the committee concluded that earnings growth would slow down in the remainder of 1999. But with employment at a new record high, and unemployment near a 20-year low, the fear must be that pay pressures remain a bit too strong for comfort - and that includes inside the Bank of England.
IDS Report, May 1999, telephone 0171 250 3434,