London, United Kingdom. Bank of England interest rate-setter Catherine Mann said UK inflation data published this week were “good numbers” but showed less improvement in underlying figures than the central bank had hoped. She also said a recent rise in the unemployment rate was “very much of a concern.”
Inflation and services sector pressures
Data published this week showed British inflation fell to 3.0 per cent, its lowest since March last year, but a measure of price pressures in the services sector remained strong.
Policy balance and March rate decision
In an interview with Kathleen Hays Presents: Central Bank Central, a podcast, Mann said the BoE was getting close “to some sense of where monetary policy is balanced between the inflation objective and full employment.”
Asked whether she would back a rate cut at the March meeting of the BoE’s Monetary Policy Committee, Mann said she was not sure that a projected fall of inflation to 2 per cent in the coming months meant Britain had fixed its high inflation problem.
“It’s actually pretty hard to tell exactly what is the sustainable or underlying trend rate of inflation, and whether or not the 2 per cent that we are … likely to see coming forward in the next few months is in fact a sustainable 2 per cent,” she said.
Recent vote and market expectations
Mann voted with the majority in a 5-4 decision by the MPC this month to keep rates on hold, and said at the time that the time for a cut was closer.
Investors were putting the likelihood of a quarter-point rate cut by the BoE in March at about 80 per cent on Thursday.
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