Mann Slams BoE Response to Iran War: Higher Rates Not Helping with Inflation

Bank of England interest rate-setter Catherine Mann criticized the central bank's initial response to the Iran war, saying it led to errors in framing policy and higher borrowing costs.

Mann argued that the BoE's 'wait mode' message in March was perceived by investors as a lack of action on inflation control, contributing to a risk premium and monetary policy uncertainty premium.

This meant that higher interest rates being paid by borrowers may not be contributing to slowing future price growth, but rather reflecting expectations of higher inflation.

Mann's views contrast with those of Governor Andrew Bailey and other Monetary Policy Committee members who said the rise in market borrowing costs gave them time to consider raising rates themselves.