BOE’s Mann Sees Inflation as ‘Transitory, Not Troubling’ for Now
Bank of England policy maker Catherine Mann sounded a relaxed note on the current acceleration in global inflation, saying the increase was transitory rather than troubling.
Speaking on a panel at a National Association for Business Economics conference Tuesday, Mann stressed that momentum in prices and wages, rather than just the growth rate, was important, and indicated the former was less worrying than the latter. There are signs the strength in demand for core goods is tapering off, she said.
Inflation has spiked around the world as economies emerging from their coronavirus lockdowns prompt higher demand and supply-chain bottlenecks. In the U.K., consumers are also grappling with a looming jump in energy prices that threatens to push inflation to more than double the BOE’s 2% target by the end of this year.
Markets have brought forward bets on U.K. interest-rate hikes in recent days, although Mann’s comments indicate she is more sanguine than some of her colleagues on the Monetary Policy Committee. She highlighted that the economy has yet to reclaim its pre-crisis level, and that a pickup in demand should be read against that backdrop.
The remarks come at a delicate moment for the central bank, as officials try to walk the line between maintaining their inflation-fighting credentials and keeping the nation’s recovery on track. On Monday, BOE Governor Andrew Bailey said monetary policy shouldn’t respond to supply shocks that don’t become more generalized across the economy, while stressing all members of the MPC agreed that the bank would need to start unwinding some of its pandemic-era stimulus sooner rather than later.
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