BoE’s Mann: A more persistent hold on the bank rate is appropriate right now

Catherine Mann, a member of the Bank of England’s (BoE) Monetary Policy Committee (MPC), said on Tuesday that the bank rate should be held persistently to lean against inflation risks. She added that she is ready to cut rates more forcefully if downside risks to growth materialise.

Key Quotes

Research shows increased persistence in inflation but also shows a weak growth outlook.

Combination of the two makes the monetary policymaker’s job harder.

In my view, the BoE scenario outlining upside risks to inflation through inflation persistence is playing out.

Downside risk to the demand scenario remains a risk but is not my central case.

Inflation persistence scenario implies a significantly tighter path for policy than is embedded in the market curve, which is not explicitly my view.

A more persistent hold on Bank Rate is appropriate right now to maintain the tight monetary policy stance needed to lean against inflation persistence persisting.

I stand ready for a forceful policy action, in the form of larger, more rapid Bank Rate cuts, should the downside risks to domestic demand start materialising.