In a speech given at the London Business School on Monday, Bank of England (BoE) Deputy Governor Ben Broadbent explained that policymakers will have to be patient to see a steady decline in wage inflation.

"It takes time to understand the forces driving the economy, particularly if one’s having to rely on nominal variables like services inflation and wage growth, things that would normally be seen as late-cycle indicators. The same goes for uncertainty relating to the accuracy of the observable variables themselves," Broadbent said and continued:

"Given the volatility in the official estimates, and the disparity (such as it is) among the various indicators we have, it will probably require a more protracted and clearer decline in these series before the MPC can safely conclude that things are on a firmly downward trend." 

Market reaction

GBP/USD showed no immediate reaction to these comments and the pair was last seen trading virtually unchanged on the day at around 1.2670.