BoE's Mann warns inflation deeply embedded in British economy

Bank of England policymaker Catherine Mann warned that inflation in Britain has become deeply embedded in the economy. Speaking at a conference hosted by TS Lombard, Mann noted that inflation has consistently run above the central bank's 2% target since she joined the Monetary Policy Committee (MPC) in 2021.

Mann criticized the BoE's approach in March, arguing that the bank erred by giving investors the impression it would take a wait-and-see stance on raising interest rates. She has voted for a quarter-point rate hike in both July and September meetings. Unlike the European Central Bank and the US Federal Reserve, the BoE has kept rates unchanged since the start of the Iran war, though markets now anticipate a move in November.

Mann expressed particular concern about inflation peaking at 4% around the turn of the year, a critical period for annual wage negotiations. While other MPC members have noted a weaker job market compared to 2022, Mann observed that economic demand remains positive, with businesses adapting to higher energy costs. She also pointed out that recent productivity gains were partly due to downward adjustments in hours worked, which could limit future non-inflationary growth.