BoE's Mann says sterling, inflation, energy influenced her rate hike vote

Bank of England policymaker Catherine Mann said her vote last month to raise Bank Rate by 0.75 percentage points reflected her concerns about a weak currency, rising inflation expectations and the boost to household incomes from an energy price cap.


Reuters | Updated: 04-10-2022 01:35 IST | Created: 04-10-2022 01:35 IST
BoE's Mann says sterling, inflation, energy influenced her rate hike vote

Bank of England policymaker Catherine Mann said her vote last month to raise Bank Rate by 0.75 percentage points reflected her concerns about a weak currency, rising inflation expectations and the boost to household incomes from an energy price cap. The BoE's Monetary Policy Committee was split three ways when voting to raise rates last month, with the majority supporting a half-point rate rise to 2.25%, while Mann and two others backed 2.5% and new member Swati Dhingra sought an increase to 2%.

Mann said her vote was driven by factors that had been building over the course of the year, including how tighter U.S. monetary policy had tended in the past to weaken sterling and increase British inflation, which is now near a 40-year high. "I do see increasingly embedded inflation, I do see inflation expectations drifting, I do see a sterling depreciation spillover and I do see daylight between real incomes and real consumption possibilities," she said in a discussion at Canada's C.D. Howe Institute.

The BoE announced its September rate decision a day before finance minister Kwasi Kwarteng gave his first fiscal statement, following which sterling temporarily plunged to a record low and bond yields soared as markets baulked at greater borrowing. Mann reiterated the BoE's position that it would assess the inflation impact of Kwarteng's plans in full before its Nov. 3 policy announcement.

BoE chief economist Huw Pill said last week that the BoE was likely to need to take significant monetary policy action to offset the stimulus from Kwarteng's budget. At its September meeting, the BoE said a cap on energy prices would reduce the peak of inflation but would probably increase inflation pressures over the medium term, as households would have more disposable income than otherwise.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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