That’s the verdict of Gary Neville.
The Reds bounced back from successive draws against Leicester and West Ham with an emphatic 3-0 win over Bournemouth in which Jurgen Klopp’s men rediscovered their style and swagger.
But City produced a response of their own the following day, putting six past Maurizio Sarri’s Blues at the Etihad Stadium with Sergio Aguero netting a hat-trick.
Pep Guardiola’s charges were excellent and were 4-0 up after just 25 minutes as they inflicted Chelsea’s worst defeat since April 1991.
Those three points put the defending top-flight champions back atop the league table thanks to their superior goal difference, although Liverpool have an extra game to play when they face rivals Manchester United at Old Trafford later this month.
Liverpool are seeking to win their first league championship since 1990 while City amassed 100 points last season on their way to the title under Guardiola.
It had been suggested the pressure and weight of expectation at Anfield was taking its toll with Liverpool having had the chance to go seven points clear of City but mustering only a draw against Leicester.
And ex-United defender Neville – who won eight titles – believes the Merseyside outfit will now have come to terms with just how much will be required if they are to win the league.
“They’ve set themselves a standard Manchester City that if they’re going to win the league,” the Sky Sports pundit told The Gary Neville Podcast.
“They are being challenged this season, they need to get to that standard week in, week out now.
“They can’t afford to make mistakes, Liverpool are a very good side themselves.
“But I think Liverpool will start to realise they’re in for a major, major battle here.
“They were seven points clear a few weeks ago and probably still thought they were in for a battle.
“I think now, City for me are definitely favourites to win this title with what I’m seeing.”
Since December 30, City front-man Aguero has nine goals and one assist in eight league games and his latest treble puts him level in the Golden Boot race with Liverpool talisman Mohamed Salah on 17 strikes.
And Neville thinks the Argentine is massively important for City at the moment.
He added: “What you see now from Aguero, I think he’s lifted City in this last month. He’s the one for me that’s grabbed the games by the scruff of the neck.
“He’s looking like a championship player. I thought he was outstanding against Liverpool, in the first 25, 30 minutes when it was a real difficult game, intense game, there wasn’t a lot of space but he stood out and looked like a world-class player.
“You talk about players standing up when it really matters, he’s standing up.
“If City are going to win back-to-back titles for the first time in this Premier League era, they can look at this last month, the Liverpool game, this game [against Chelsea] and think about his influence on it. It’s been outstanding.”
Liverpool have an 11-day break before facing Bayern Munich in the last 16 of the Champions League, a game which precedes a trip to bitter enemies United who are unbeaten in 11 games under Ole Gunnar Solskjaer.
Meanwhile City are in action against Newport County in the FA Cup fifth round this Saturday before taking on Schalke in Europe and then going head-to-head with Chelsea again, in the Carabao Cup final, before they return to Premier League commitments on February 27.