LONDON, June 6 Reuters British businesses39; expectations for wage growth over the coming year fell sharply last month, according to a Bank of England survey which may ease policymakers39; worries that it will be hard to keep inflation on target.

Expectations for wage growth over the coming year in the BoE39;s Decision Maker Panel survey dropped to 4.1 in May from 4.6 in April, while on a threemonth average basis, the measure fell to 4.5 from 4.8.

Both figures were the lowest since the current series started in May 2022.

Average earnings excluding bonuses rose by an annual 6 in the first quarter of 2024 much higher than the rate of around 3 which most BoE policymakers view as consistent with their 2 consumer price inflation target.

Last month, the BoE forecast annual wage growth would only drop to around 5.25 by the end of this year.

Several policymakers have said they want to see clear signs that both wage growth and service price inflation are falling before they begin to cut interest rates, which are at a 16year high of 5.25.

Financial markets do not fully price in a first rate cut until November much later than many economists thought just a few weeks ago partly reflecting persistent inflation in the United States as well as in Britain.

The BoE survey showed that businesses expected inflation in one year39;s time to be 2.9, unchanged from April39;s yearahead expectation and above the current 2.3 rate.

The central bank forecasts inflation will rise towards…