BoE’s Catherine Mann Warns Inflation Expectations Still Too High in the UK

Bank of England (BoE) policymaker Catherine Mann warned that Britain’s inflation expectations remain elevated, suggesting that interest rates must stay restrictive for longer to ensure price stability.

Speaking at an event organised by the Resolution Foundation, Mann said that maintaining tight monetary policy, though counterintuitive for growth, is essential to return inflation to the BoE’s 2% target.

«It is perhaps counterintuitive that in order to create an environment conducive to growth, monetary policy must remain restrictive for longer,» she said. «But this is necessary to bring inflation sustainably back to target.»

Mann, who voted last month to hold rates steady, cited evidence that UK consumers and businesses are still factoring price increases into their decisions, a sign that inflationary expectations have not yet normalized.

Quoting her former mentor Alan Greenspan, Mann noted that true price stability occurs only when expected price changes no longer influence spending or wage-setting behavior.

Last week, Mann said the UK’s inflation had become «persistently high,» though she did not rule out future rate cuts if conditions improve.