Bank of England's (BoE) Deputy Governor Clare Lombardelli said that further signs of a slowdown in the British economy may require the Bank of England to take faster action in terms of monetary policy easing.
She also pointed out that despite good progress in the fight against inflation, it is too early
to "declare victory" over inflation. "The shocks that led to an increase in inflation have dissipated, and inflation has returned to the target level. But the more stable components of inflation and uncertainty about how the labor market will develop are worrying," Lombardelli said, adding that the process of wage inflation, which may be slowing, could be negatively impacting the disinflationary process.
"The outlook for wages and services prices is unclear from here. This is why I support a gradual removal of monetary policy restriction," Lombardelli said.
Regarding the outlook for the British economy, she said there was a risk that the economy would grow more slowly than expected. "If the economy shows signs of unforeseen weakness, the Bank of England may accelerate the process of lowering interest rates. Given the lags in policy it would be important not to act late if the economy moved in this direction," she said.