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The Bank of England sees “encouraging signs” in important areas of inflation, its governor has said, adding that the bank did not need price growth to hit its 2 per cent target before reducing interest rates.

Andrew Bailey said inflation had “come down very rapidly” in the UK, but he wanted to see more progress in the areas of services inflation, wage growth and the state of the labour market.

“I am looking for more sustained progress on those three things,” Bailey said in a hearing before the Treasury select committee on Tuesday. “We have seen, I think, encouraging signs on them.”

This is a developing story

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