Boes Mann Says Uk Wage Pressures May Last For Years By Reuters

Bank of England’s Catherine Mann Warns of Persistent Inflation, Despite Rate Hikes

Policymaker Flags Ongoing Wage Pressures, Doubts Inflation Has Peaked

Key Points

• Bank of England policymaker Catherine Mann voted against this month’s cut in interest rates.
• Mann sees continued upward pressure on wages, especially among the low-paid.
• She believes British inflation, which recently returned to the 2% target, has likely risen again.
• Mann stresses the need for further interest rate increases to bring inflation under control.

In a recent interview with the Financial Times, Catherine Mann, an external member of the Bank of England’s Monetary Policy Committee (MPC), expressed concerns about persistent inflation in the United Kingdom. Despite the MPC’s decision to raise interest rates earlier this month, Mann voted against the move, arguing that it was too early to ease monetary policy.

One of Mann’s key concerns is the continued upward pressure on wages, particularly in the low-paid sector. She explained, “We're seeing wage increases being most rapid at the bottom end of the pay distribution.” This trend, she argues, is likely to keep inflationary pressures elevated in the coming months.

Despite data showing that British inflation returned to the Bank of England's 2% target in May, Mann remains skeptical that the peak has been reached. She expects inflation to rise again in the coming months, possibly above 2.3%. This would mark a significant increase from the MPC’s current projections, which predict inflation will fall back to 2% by the end of the year.

Mann’s concerns highlight the challenges facing the Bank of England as it attempts to bring inflation under control. The central bank has already raised interest rates four times this year, but it may need to continue hiking rates if inflation remains stubbornly high. Further interest rate increases could have a negative impact on the economy, but they may be necessary to prevent inflation from becoming entrenched.

The Bank of England will release its latest inflation report on August 4th. The report will provide updated economic forecasts and will offer further insight into the central bank’s thinking on the inflation outlook. Mann's comments suggest that the MPC may need to take a more aggressive approach to monetary policy if inflation does not start to fall more rapidly.