Catherine Mann

BOEs Catherine Mann

BOE MPC member Catherine Mann is speaking. . She says:

  • income data suggest increasingly stark trade-off in terms of rising and persistent inflation vs. deteriorating real income
  • UK’s exposure and the sensitivity to global spillover could exasperate the inflation activity trade-off
  • incoming data on  inflation  show increasing domestic embeddedness, persistence and momentum
  • countervailing factors importantly and increasingly are likely to support consumption spending in the near term
  • a robust policy move would reduce risk that domestic inflation already embedded is further boosted by inflation imported via a sterling depreciation
  • domestic conjunctural situation is characterized by very high inflation
  • if the Fed tightens at the currently expected pace, and ECB musters an increase soon, the scenarios outlined above suggest additional depreciation pressure on sterling
  • given the likely double-digit inflation, being mindful of the near term implications of the global factors for inflation is particularly relevant
  • a 50 basis point move reduces risk of domestic inflation being boosted by weaker sterling
  • I open the door to a policy rate reversal in the medium-term when the domestic supports to demand fade and when weakness in external sources of demand bite
  • For the UK data shows that a US tightening has been inflationary rather than disinflationary
  • it is important to react in a timely fashion to a US monetary policy shock that causes the UK price level to jump

At the recent June meeting last week, MPC members Mann, Jonathan Haskel and Michael Saunders voted for a larger 50 basis-point increase.