Why is the unemployment news so good? Well, a lot of it stems from keeping wage rises to a minimum

Still, the question of a return to a more normal interest rate regime is in play

Headlines I never thought I’d see: “Staggeringly strong labour market,” ran one economist’s take on the latest UK jobs figures. Pretty much every observer agreed. The long winter in the UK’s labour market is over.

So why is the news so good? As former Bank of England policymaker David Blanchflower pointed out in these pages on Monday, a lot of it is because we have kept wage rises to a minimum. Compared with past recessions, that is a new factor, and one that means the Bank need not raise rates in the way it might have in the past to constrain consumer spending. More people are in work - but at lower wages that doesn’t mean the economy is about to boom and inflation is set to let rip.

Still, the question of a return to a more normal interest rate regime is in play, and it will happen, sooner or later. It will be a symbolic moment with a psychological impact. The media will unhelpfully scream about “hikes” and opposition politicians will go on about “hard working families” facing an even more acute cost of living crisis.

And yet the reality will be much different. The Bank will move to tighten policy, reverse its “quantitative easing” and move from an historically low Bank Rate rate only slowly and with baby steps. Even if rates went to 0.75 per cent by the time of the next election, it might only add £20 a month to a mortgage (depending on how far and how fast the lenders pass the rate rise on to their customers).

Set that, please, against the virtual holiday from interest payments for an astonishing five years those on tracker mortgages have enjoyed – effectively a windfall gain of many thousands of pounds.

So the best thing that Bank Governor Mark Carney can do is to educate and reassure a jittery public. When rates will rise is unknown; what is certain is that the Bank will strain every intellectual sinew to ensure that there will be no sudden jolts to an economy that is far from fully recovered. So please; try not to worry.

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