Bank of England's Lombardelli says caution still needed over inflation risks

LONDON (Reuters) -Bank of England Deputy Governor Clare Lombardelli said on Monday that there were signs that inflation pressures in Britain would continue to weaken but she was still cautious and would wait for evidence of the slowdown.

"Caution remains appropriate. I’ll be more comfortable when I see material deceleration in the data over a longer period," Lombardelli said in a speech at King’s Business School.

She said she had initially been undecided about the need to cut interest rates last week before being persuaded by signs of progress on disinflation and the intensification of global trade tensions.

The BoE cut interest rates on May 8 for the fourth time since last August as U.S. President Donald Trump's trade war loomed over the global economy.

Lombardelli said progress on cooling domestic inflation pressures had been a more important factor than the U.S. trade tariffs for her decision to back the rate cut last week.

However, wage growth was still too high to bring inflation down to the BoE's 2% target and it was sensible to continue with a gradual pace of cutting rates.

Lombardelli said she welcomed reports of a trade deal struck by the United States and China.

(Reporting by William Schomberg and David Milliken; editing by Suban Abdulla)

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