London Daily

Focus on the big picture.
Sunday, Sep 13, 2026

Bank of England needs to push back against inflation -Mann

Bank of England needs to push back against inflation -Mann

The Bank of England needs to lean against inflation pressures and stop expectations of higher price growth from getting entrenched in businesses' wage and pricing decisions this year, BoE policymaker Catherine Mann said on Friday.

The BoE is widely expected to raise interest rates at its Feb. 3 meeting, after becoming the world's first major central bank to tighten policy in response to post-pandemic inflation pressures in December.

British inflation in December was its highest in nearly 30 years at 5.4%, and Mann said the BoE's monthly survey of businesses showed their pricing and wage-setting expectations were not consistent with inflation returning to its 2% target.

"The ingredients appear to be in place for inflation to stay strong for longer, but costs becoming embedded in prices to create a reinforcing dynamic is not inevitable," Mann said in a speech to OMFIF, a central banking think tank.

"In my view, the objective for monetary policy now should be to lean against this 'strong-for-longer' scenario," she added.

Mann is the first BoE official to give a speech on monetary policy since the Dec. 16 rate rise. Chief Economist Huw Pill said in a CNBC interview on Dec. 17 after that more rate rises were likely if inflation stayed high, and Governor Andrew Bailey told a parliament committee on Wednesday that he was concerned about the outlook for natural gas prices and wages.

Mann, who voted with the majority on the BoE's Monetary Policy Committee to raise rates in December, said she was waiting for new BoE staff briefings before she decided whether rates needed to increase in February.

Depending on the strength of global inflation pressures, BoE monetary policy could need to be tighter than warranted by British domestic economic conditions alone, she said.

ACT SOONER, NOT LATER


But early action to push down on the public's and businesses' inflation expectations could limit the amount of tightening needed further along the line.

"To the extent that monetary policy actions now dampen expectations, and to the extent that any deceleration of global prices is passed through to UK inflation, and to the extent that financial markets are already cautioning decisions, the next steps could exhibit a shallower path," Mann said.

In a question and answer session, Mann rejected a charge that the BoE had been too slow to start raising rates.

Higher rates would have had little effect on surging energy prices or global supply chain problems, employment remained below pre-COVID levels and economic output was still lower than where it would have been without the pandemic, she said.

Equally, the BoE could not take the same approach as in 2011 when there was a spike in oil prices that also pushed inflation above 5%, but which came at a time when British unemployment was near its peak after the global financial crisis.

"Where we are now, I think, is potentially a 'regime change' where we have a tight labour market, we have tight goods markets ... That is an environment where firms and workers see themselves as having pricing power," Mann said.

Central bankers have generally played down any similarity between now and the 1970s, when most Western economies suffered from a self-reinforcing spiral of wages and prices at a time of greater trade union power and less focused monetary policy.

But even with an unfavourable inflationary backdrop, Mann said it was unclear how far interest rates would need to rise.

Businesses' ability to raise prices would be limited by the ongoing squeeze on consumers' disposable income, amplified by tax rises taking effect in April. A "very steep yield curve" in financial markets also tightened financial conditions.

Newsletter

Related Articles

0:00
0:00
Close
Bayeux Tapestry Draws Large Crowds at British Museum
Cuts to International Aid Raise Concerns Over Fragile Overseas Health Systems
UK Airlines and Logistics Operators Adjust Capacity as Fuel Costs Rise
UK Mortgage Arrears Edge Lower in Second Quarter
UK Government Advances New Devolution Offers for English Councils
UK Parliament Begins Debate on NHS Governance and Single Patient Record Reforms
Andy Burnham Launches Number 10 North Devolution Initiative
UK Parliament Rejects Assisted Dying Bill for Terminally Ill Adults
UK Bans Goods From Israeli Settlements in the Occupied West Bank
UK Economy Grows 0.4% in July as Technology Services Strengthen
Metropolitan Police Continue Investigation Into Reform UK Political Financing
Chinese Crypto Entrepreneur Leon Li Identified as Seller of £190 Million London Mansion
Trades Union Congress Proposes Social Energy Tariff Funded by Higher Bank Surcharge
British Chambers of Commerce Calls for State Pension Triple Lock to Be Scrapped
Anthropic Says Claude Helped Disrupt Biological Weapons and Cyber Espionage Threats
UK Imposes Sanctions Over Israeli Settlements and West Bank Violence
UK Reimposes Sectoral Sanctions on Iran’s Aviation, Shipping and Energy Networks
UK Economy Grows 0.4% in July as AI and Programming Services Lift Activity
UK House of Commons Rejects Assisted Dying Bill by 286 Votes to 270
UK Reviews Nationwide Emergency Alert Tests After Systems Meet Reliability Targets
UK Seeks Faster Rail Links Across Northern Industrial Corridors
British Business Bank Allocates £150 Million for High-Growth Companies in Northern England
BBC Warns Staff Strikes Are Possible Amid Pay Dispute and £500 Million Savings Drive
UK Backs Short Extension of UN Sudan Sanctions Regime
Prime Minister Andy Burnham Defends Early Prison Release Reforms and Growth Strategy
Reform UK Faces Scrutiny Over Alleged Effort to Circumvent Foreign Donation Rules
UK Analysts Warn Tax Rises or Spending Cuts May Be Needed to Preserve Fiscal Headroom
Jaguar Land Rover Plans Up to 4,000 Job Cuts in £1.7 Billion Cost-Saving Drive
UK Chancellor Warns of Difficult October Budget as Borrowing Costs Rise
UK Declares Israeli Occupation of West Bank Unlawful and Expands Sanctions
UK House of Commons Rejects Assisted Dying Bill for England and Wales
English Councils to Gain Power to Introduce Tourist Taxes by 2028
Kemi Badenoch Reshuffles Conservative Shadow Cabinet
Firefighters Make Progress Containing Major Wildfires in South Wales
John Lewis Partnership Reports £124 Million Loss
Study Says UK AI Data Centres Will Create Only a Quarter of Forecast Jobs
UK Government Considers Higher Industrial Water Prices Amid Supply Pressures
Andy Burnham Holds First Call With Donald Trump as UK Prime Minister
NHS Records Busiest Summer on Record as Heatwaves Drive Hospital Admissions
Home Secretary Orders Police Crackdown on Far-Right Anti-Migrant Vigilantes
UK Supreme Court Rules Northern Ireland Religious Education Curriculum Breaches Human Rights Standards
Markets Price in Four Bank of England Rate Rises by Next Summer
House of Commons Prepares Free Vote on Assisted Dying Bill
UK Government Bans Trade With Israeli Settlements in Occupied Territories
UK Economy Grows 0.4% in July as Artificial Intelligence Investment Supports Expansion
Andy Burnham Becomes UK Prime Minister After Keir Starmer Resigns
John Lewis Partnership Loss Widens to £124 Million
UK Government to Put White Working-Class Social Mobility at Centre of Equality Policy
McLaren Plans £450 Million Technology Investment Creating 1,000 UK Jobs
UK Chancellor Faces Calls for Wealth Taxes and Public Ownership in Autumn Budget
×