BoE's Lombardelli says the labour market is stuck in low gear, UK has a low-hire, low-fire labour market that creates its own problems; might be necessary to raise rates further in the near term

• Balance of inflation risks to the upside
• Greater prospect of second-round effects
• Energy shock has become more persistent
• The longer energy costs stay high, the greater the pressure there will be on businesses to restore margins
• Argues that the conditions for persistent inflationary dynamics over the mid-term are crystallizing.
• In setting monetary policy, will continue to look beyond the headline numbers: at whether hiring is recovering, whether people can move towards the jobs available, and whether labour market weakness is genuinely easing wage and inflation pressures. That evidence will shape judgement of how much further monetary policy needs to go to return inflation sustainably to the 2% target.

The notable feature is the pairing of a weak labour market with an openness to further tightening, the classic stagflationary framing in which soft activity data does not translate into easing because inflation persistence is judged the binding risk. Deputy governors at the BoE have historically carried weight as signals of the MPC's internal centre of gravity, so the question is whether this reflects a developing majority view or a more hawkish outlier position ahead of the next vote. The low-hire, low-fire characterisation matters for mechanism: a market that sheds labour slowly tends to disinflate slowly, which is the logic behind entertaining more hikes despite evident slack, and it places the burden of proof on upcoming wage settlements and services inflation rather than headline prints. In comparable episodes, front-end gilt yields and sterling have repriced on the perceived hawkishness of the path rather than on the growth signal, with the two pulling in opposite directions and rates usually winning. The follow-ons are whether other MPC members echo the second-round and margin-restoration language, and how the next labour and wage data read against the conditions laid out here.