(Bloomberg) -- Catherine Mann, the most hawkish member of the Bank of England’s rate-setting panel, has softened her stance on double-digit inflation in the UK after seeing an easing in future price expectations.
“An important ingredient for me was that these forward-looking measures of price expectations, particularly for firms and households, had started to moderate which is exactly the signal to me that my monetary policy is having an effect,” the external policymaker said on her decision to vote for a smaller rate rise on Thursday.
The remarks in a panel discussion on Friday suggest that Mann, who has called for more aggressive action against inflation, is beginning to see a turning point in the battle against inflation. There have been signs of inflation expectations cooling significantly in recent monthly surveys conducted by the BOE.
Mann has been one of the more rebellious members of the Monetary Policy Committee but voted with the majority on Thursday by backing a quarter-point rise in interest rates to 4.25%.
However, she also suggested the BOE could still tighten financial conditions further after starting from a “very loose accommodative stance.”
“There’s a lot to tighten up before we actually get to a tight 10, a tight condition. So these are the kinds of things that we continue to look at.”
- Mann also warned that Brexit helped fuel the strongest food price inflation in 45 years by causing an exodus of small EU exporters from the UK market. She said European firms exporting food to Britain had become tangled up in expensive red tape.
- She said the BOE is watching financial conditions closely as it is “a centerpiece of the monetary policy transmission.”
- Mann also pointed to evidence indicating resilient demand in the UK economy, calling Friday’s retail sales figures “robust.”
©2023 Bloomberg L.P.
Advertisement