MNI BRIEF: Upside Inflation Risks Worrying - BOE Lombardelli
MNI (LONDON) - UK inflation risks appear broadly balanced but there are concerns about what would happen if the upside risks to prices materlialized, Bank of England Deputy Governor Clare Lombardelli in her first public speech since her arrival in July.
Lombardelli speaking at a BOE Watchers event in London, highlighted some signs of slowing disinflation in the labour market while stressing that she was open-minded about the possibility of inflation slowing faster than expected, but her comments suggest that she is likely to be cautious about easing policy, putting her in line with the Bank's current gradualist approach. (see MNI POLICY: BOE Braces For Trump Impact Without Scenarios )
"There are some signs that the process of wage disinflation may be slowing. Firms expect wage growth to decline further, but their one-year ahead expectations seem to have stabilised in recent months," she said, suggesting that the last mile to meeting the inflation target sustainably may be the hardest, although she noted the unreliability of labour market data.