Bank of England Monetary Policy Committee member Alan Taylor expressed concern about the persistent pace of services inflation during a Deutsche Bank event on Monday. The dovish policymaker noted that services Consumer Price Index has failed to decline as rapidly as hoped, remaining elevated at 4.4% in January despite slowing from 4.5% previously.

Taylor, who had previously been among the more optimistic voices on inflation, said he now sees a risk of an inflation undershoot as wage growth moderates. The latest data showed wages growing at 4.2%, still above levels policymakers view as consistent with returning inflation to the 2% target sustainably. He attributed the stickiness to productivity improvements not materializing as expected.

The BOE has been navigating a delicate rate-cutting cycle, with services inflation proving a stubborn challenge throughout. Taylor noted the labour market is weakening in line with more pessimistic forecasts, suggesting the central bank may need to recalibrate its approach. His comments signal growing unease within the MPC about the path to price stability, particularly as services inflation has remained a key concern during the easing cycle.