BoE’s Lombardelli: I support a gradual removal of monetary policy restriction

The UK economy has made good progress on disinflation.

Persistent components of inflation and uncertainties around how the labour market will evolve are cause for concern.

We need careful observation of all the relevant economic data and intelligence as we seek to gradually reduce policy restriction.

On Bernanke review, publishing a form of expected path risks suggesting greater certainty about future rates than it is possible to give.

Will be monitoring the flow of data over the coming months so we can calibrate our policy path as needed.

Too early to declare victory on inflation.

Often said that the last mile may be the hardest, and that’s where we are now.

Outlook for wages and services prices is unclear from here.

Some signs that the process of wage disinflation may be slowing.

Am more worried about the possible consequences if the upside risk materialised.

We are hampered by the challenges of data quality, particularly in the labour force survey.

'Flash’ PMIs for November may suggest some slowing in the UK economy but i don’t take a strong signal from a single release.

An upside risk where wage rises normalise to 3.5-4% and cpi around 3% rather than 2% would be more costly to change if it becomes entrenched.

Given the lags in policy it would be important not to act late if the economy moved in direction suggested by PMIs.

I view the probabilities of downside and upside risks to inflation as broadly balanced.

At this point I am more worried about the possible consequences if the upside inflation risks.