I view the probabilities of downside and upside risks to inflation as broadly balanced. But at this point I am more worried about the possible consequences if the upside materialised, as this could require a more costly monetary policy response.
Lombardelli said the level of interest rates was “comfortably in restrictive territory at the moment” and supported “a gradual removal of monetary policy restriction” but the data over the coming months will be critical and need “careful observation.”
“There are some signs that the process of wage disinflation may be slowing, so it’s too early to declare victory on inflation. It’s often been said that the last mile may be the hardest, and that’s where we are now.”
