London Daily

Focus on the big picture.
Monday, Dec 08, 2025

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
"The Great Filtering": Australia Blocks Hundreds of Thousands of Minors From Social Networks
Mark Zuckerberg Pulls Back From Metaverse After $70 Billion Loss as Meta Shifts Priorities to AI
Nvidia CEO Says U.S. Data-Center Builds Take Years while China ‘Builds a Hospital in a Weekend’
Indian Airports in Turmoil as IndiGo Cancels Over a Thousand Flights, Stranding Thousands
Hollywood Industry on Edge as Netflix Secures Near-$60 Bln Loan for Warner Bros Takeover
Drugs and Assassinations: The Connection Between the Italian Mafia and Football Ultras
Hollywood megadeal: Netflix acquires Warner Bros. Discovery for 83 billion dollars
The Disregard for a Europe ‘in Danger of Erasure,’ the Shift Toward Russia: Trump’s Strategic Policy Document
Two and a Half Weeks After the Major Outage: A Cloudflare Malfunction Brings Down Multiple Sites
UK data-regulator demands urgent clarity on racial bias in police facial-recognition systems
Labour Uses Biscuits to Explain UK Debt — MPs Lean Into Social Media to Reach New Audiences
German President Lays Wreath at Coventry as UK-Germany Reaffirm Unity Against Russia’s Threat
UK Inquiry Finds Putin ‘Morally Responsible’ for 2018 Novichok Death — London Imposes Broad Sanctions on GRU
India backs down on plan to mandate government “Sanchar Saathi” app on all smartphones
King Charles Welcomes German President Steinmeier to UK in First State Visit by Berlin in 27 Years
UK Plans Major Cutback to Jury Trials as Crown Court Backlog Nears 80,000
UK Government to Significantly Limit Jury Trials in England and Wales
U.S. and U.K. Seal Drug-Pricing Deal: Britain Agrees to Pay More, U.S. Lifts Tariffs
UK Postpones Decision Yet Again on China’s Proposed Mega-Embassy in London
Head of UK Budget Watchdog Resigns After Premature Leak of Reeves’ Budget Report
Car-sharing giant Zipcar to exit UK market by end of 2025
Reports of Widespread Drone Deployment Raise Privacy and Security Questions in the UK
UK Signals Security Concerns Over China While Pursuing Stronger Trade Links
Google warns of AI “irrationality” just as Gemini 3 launch rattles markets
Top Consultancies Freeze Starting Salaries as AI Threatens ‘Pyramid’ Model
Macron Says Washington Pressuring EU to Delay Enforcement of Digital-Regulation Probes Against Meta, TikTok and X
UK’s DragonFire Laser Downs High-Speed Drones as £316m Deal Speeds Naval Deployment
UK Chancellor Rejects Claims She Misled Public on Fiscal Outlook Ahead of Budget
Starmer Defends Autumn Budget as Finance Chief Faces Accusations of Misleading Public Finances
EU Firms Struggle with 3,000-Hour Paperwork Load — While Automakers Fear De Facto 2030 Petrol Car Ban
White House launches ‘Hall of Shame’ site to publicly condemn media outlets for alleged bias
UK Budget’s New EV Mileage Tax Undercuts Case for Plug-In Hybrids
UK Government Launches National Inquiry into ‘Grooming Gangs’ After US Warning and Rising Public Outcry
Taylor Swift Extends U.K. Chart Reign as ‘The Fate of Ophelia’ Hits Six Weeks at No. 1
250 Still Missing in the Massive Fire, 94 Killed. One Day After the Disaster: Survivor Rescued on the 16th Floor
Trump: National Guard Soldier Who Was Shot in Washington Has Died; Second Soldier Fighting for His Life
UK Chancellor Reeves Defends Tax Rises as Essential to Reduce Child Poverty and Stabilise Public Finances
No Evidence Found for Claim That UK Schools Are Shifting to Teaching American English
European Powers Urge Israel to Halt West Bank Settler Violence Amid Surge in Attacks
"I Would Have Given Her a Kidney": She Lent Bezos’s Ex-Wife $1,000 — and Received Millions in Return
European States Approve First-ever Military-Grade Surveillance Network via ESA
UK to Slash Key Pension Tax Perk, Targeting High Earners Under New Budget
UK Government Announces £150 Annual Cut to Household Energy Bills Through Levy Reforms
UK Court Hears Challenge to Ban on Palestine Action as Critics Decry Heavy-Handed Measures
Investors Rush Into UK Gilts and Sterling After Budget Eases Fiscal Concerns
UK to Raise Online Betting Taxes by £1.1 Billion Under New Budget — Firms Warn of Fallout
Lamine Yamal? The ‘Heir to Messi’ Lost to Barcelona — and the Kingdom Is in a Frenzy
Warner Music Group Drops Suit Against Suno, Launches Licensed AI-Music Deal
HP to Cut up to 6,000 Jobs Globally as It Ramps Up AI Integration
MediaWorld Sold iPad Air for €15 — Then Asked Customers to Return Them or Pay More
×