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Newsflash: A deputy governor at the Bank of England has warned that it is “too early to declare victory” in the fight against inflation.

Clare Lombardelli has told a conference at the Bank this morning that inflation has fallen steeply over the past two years. But, she is concerned that there are signs that the process of “wage disinflation” may be slowing, which would keep the cost of living rising faster than the Bank’s target.

The outlook for wages and services prices is unclear from here.

We need to see more evidence that wage growth and services inflation will continue their journey down to target-consistent rates.

The UK economy has made good progress on disinflation. The shocks that drove inflation up have dissipated and inflation has returned to around target.

But the more persistent components of inflation and uncertainties around how the labour market will evolve are cause for concern. So we need careful observation of all the relevant economic data and intelligence as we seek to gradually reduce policy restriction.