Earlier today, BoE policymaker Catherine Mann reiterated a hawkish stance, saying that at the June policy meeting she saw greater upside risks to inflation than downside risks to economic activity. As a result, the balance of risks has shifted her toward favoring a longer period of restrictive policy and, if necessary, additional tightening to guard against persistent inflation.
She emphasized that incoming data during the second half of the year will be critical, particularly in determining whether inflation pressures are becoming more entrenched. While restrictive financial conditions are helping to offset cost-driven inflation, she argued that fiscal policy will also play an important role in returning inflation to the Bank of England’s 2% target.
Mann also pointed to underlying labor market resilience, noting that conditions in some sectors appear stronger than suggested by the headline unemployment rate. In addition, both short- and long-term inflation expectations remain elevated, reinforcing her concern that inflation persistence remains a meaningful risk.
She now adds that:
- Loosening of financial conditions since June will be important for her rate vote at the next meeting.
This article was written by Greg Michalowski at investinglive.com.