THE US Federal Reserve has at long last raised benchmark interest rates in the world’s largest economy. Notoriously fickle financial markets seemed happy in the immediate wake of Wednesday’s rate move, although less sure during New York trading hours yesterday.

An eventual rate rise by the US central bank has, in recent years, been cited as a likely precursor to increases in borrowing costs in economies including the UK.

However, the Fed has now raised and the Bank of England still seems a significant distance away from being able to increase UK base rates.

The divergence of the monetary policy outlooks in the UK and US has played a key part in the pound dropping below $1.50.

Looking for positives, this currency move might mean exporters in Scotland and elsewhere in the UK, which have been under pressure in the eurozone because of sterling’s strength against the single currency, could find things a bit easier in the US and other dollar-denominated markets. However, with the European Central Bank having had to ease, rather than tighten, monetary policy in recent times, exporters are likely to continue to face tough times in the eurozone.

The rise in the key Fed funds rate in the US, from 0.25 per cent to 0.5 per cent, has been a long time coming. The last time this key interest rate was raised was way back in 2006.

The fact the last increase was nearly a decade ago underlines, if anyone needs it flagged, just how long the economic weakness has persisted.

The financial crisis became evident in 2007, ushering in deep recession not long afterwards.

Amid the Conservatives’ austerity drive, the UK took much longer to regain its pre-recession level of output than the US.

So how close are we to a rise in UK base rates? Base rates here have been at a record low of 0.5 per cent since March 2009. They were last increased in July 2007, when they were raised by a quarter-point to 5.75 per cent.

Economists do not believe the Bank of England will now be following hard on the heels of the Fed in terms of tightening monetary policy.

A poll by Reuters published late last month showed economists did not expect a rise in UK base rates before the second quarter of next year, even though it was anticipated widely at the time of the survey that the Fed would likely move as it has this week.

And the poll preceded official data this week showing a significant slowdown in pay growth in the UK.

A month ago, Bank of England chief economist Andy Haldane flagged signs of a slowdown in earnings growth in the context of future monetary policy.

And this week’s labour market figures would seem likely to reinforce worries about the downward impact of weak pay growth on demand and inflation.

The figures, published by the Office for National Statistics, showed annual earnings growth in the UK, excluding bonuses, slowed to two per cent in the three months to October. This was the weakest annual growth in earnings since the three months to February.

And we would do well to remember that the fairly recent phenomenon of renewed growth in earnings in inflation-adjusted terms followed a painful period of many years of declining real pay for UK households.

It is worth considering whether the UK economy is suffering, in terms of the lack of sufficient wage growth to boost demand and produce anything like a convincing recovery, from the dismantling of employment laws and the serious erosion of union power. There seems to be plenty of anecdotal evidence to suggest this is the case.

The pressure on household budgets was underlined again this week by a survey from the Scottish Retail Consortium showing the value of sales north of the Border in November was down by 2.3 per cent on the same month of last year.

This was a much weaker result than the 0.7 per cent year-on-year rise in retail sales value for the UK as a whole reported by the British Retail Consortium.

The UK sales figures, it is worth noting, are no great shakes either. And they are being skewed by the prosperity of London and the south-east, where top-end property prices are being buoyed by the UK Government’s policies and those with money in their pockets are clearly splashing the cash again.

There appears to be growing evidence of a north-south gap, which is perhaps not surprising given the type of economic policies being pursued and the fact these have prevailed since 2010.

However, while some are clearly benefiting from the Conservatives’ policy mix, the overall picture is weak, with the UK’s unbalanced recovery having slowed significantly in the third quarter.

And the slowdown in wage growth is likely to be an absolutely crucial factor in terms of its implications for both the economic recovery and monetary policy.

Ross McEwan, chief executive of taxpayer-backed Royal Bank of Scotland, said this week that he did not believe UK base rates would rise at all in 2016.

Bank of England deputy governor Minouche Shafik, who sits with Mr Haldane on the nine-strong Monetary Policy Committee, said she wanted to see sustained growth in wages that would push up inflation before backing higher interest rates.

While the UK crawled out of deflationary territory again in November, according to figures published this week, the annual UK consumer prices index inflation rate of 0.1 per cent was negligible. Crucially, annual CPI inflation has been stuck in the range of -0.1 per cent to +0.1 per cent since February, way adrift of the two per cent target set for the Bank of England by the Treasury.

Meanwhile, the Conservatives’ relentless austerity programme, including a continuing commitment to slash annual welfare spending by a further £12 billion, will continue to weigh on demand in the economy.

You get the impression the Conservative Government and Bank of England would love for the UK to be able to ride on the coat-tails of the Fed by raising interest rates, in some sort of symbolic sign that better times might now be close. Unfortunately for them, any such desire seems unlikely to correlate in the immediate future with the reality of the situation.