Key facts
- Lombardelli said she would not rule December or February in or out and that each MPC meeting was live.
- She said her vote would be affected by Middle East conflict developments and by price and labor market data.
- Lombardelli said the BoE does not see longer-term public inflation expectations de-anchoring.
- She described Britain's labor market as in low gear, with reduced hiring and job turnover.
- She said a rise in unemployment may put less downward pressure on inflation than before due to skills mismatch.
- She said the problem seemed particularly acute for workers aged 18-24.
Bank of England Deputy Governor Clare Lombardelli said on November 10 that the conditions for persistent inflation in Britain are crystallising, and that in the absence of evidence of weaker inflation pressures she continues to think there is likely a case for a further increase in rates in the near term.
She spoke at a central banking conference hosted by King's Business School and the Money, Macro & Finance Society in London. Lombardelli voted as part of the 8-1 majority at the Bank of England the previous week, when the committee raised Bank Rate to 4% from 3.75%.
Asked about her voting intentions for coming Monetary Policy Committee meetings, Lombardelli said: "I wouldn't rule December in or out, February in or out," adding that each meeting was "live". She said her vote would be affected by developments around the conflict in the Middle East, as well as price and labor market data.
Lombardelli said the BoE does not see a de-anchoring of longer-term public inflation expectations taking place. The bulk of her speech focused on Britain's labor market, which she said was in "low gear" with reduced rates of both hiring and job turnover.
She said there was a risk that a given increase in unemployment would put less downward pressure on inflation than before, due to an increased mismatch between workers' skills and employers' needs. The problem seemed particularly acute for younger workers aged 18-24, whose unemployment rate had risen more compared with other workers than had been the case elsewhere in Europe.