LONDON, Feb 19 - Bank of England policy committee member Catherine Mann said the inflation report issued this week showed "good numbers," but she expressed disappointment that underlying measures of price pressure had not eased as much as the central bank had anticipated.
In an interview on the podcast Kathleen Hays Presents: Central Bank Central, Mann also pointed to a recent rise in the jobless rate as "very much of a concern," saying that the BoE was approaching "some sense of where monetary policy is balanced between the inflation objective and full employment."
Official figures released on Wednesday indicated that headline inflation fell to 3.0%, its lowest level since March of last year. Despite the decline in overall inflation, Mann noted that a gauge of services-sector price pressures remained strong, an outcome she views as important for assessing persistent inflationary momentum.
When asked whether she would support a rate reduction at the Monetary Policy Committee meeting in March, Mann said she remained unconvinced that a forecasted decline of inflation to around 2% in the coming months meant that the United Kingdom had definitively resolved its elevated 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% that we are ... likely to see coming forward in the next few months is in fact a sustainable 2%," she said.
Mann was among the majority on the Monetary Policy Committee in this month's 5-4 vote to hold interest rates steady. She has previously said that the timing for a cut was moving closer.
Market indicators showed investors placed roughly an 80% probability on a quarter-point reduction in Bank Rate at the March meeting on Thursday.
Context and implications
Mann's comments underline two themes central to the Bank's policy deliberations: the distinction between headline inflation and underlying inflationary trends, and the trade-off between achieving the inflation target and supporting employment. While headline CPI has moved lower to 3.0%, the persistence of services inflation and an uptick in unemployment complicate the assessment of whether further easing in policy is appropriate and sustainable.