In a speech today, BoE MPC member Catherine Mann emphasized the importance of a cautious approach to easing monetary policy, stating that it’s preferable to remain restrictive longer amid inflation uncertainties.
She argued that “a risk management assessment implies it is better, under inflation uncertainty, to remain restrictive for longer, until right tail risks to the inflation process dissipate, and then to cut more aggressively.”
This “more activist strategy”, according to her, would allow for a sustainable inflation outcome with less impact on the economy, as she mentioned it helps achieve the target “at a lower sacrifice ratio.”
Despite agreeing with the majority of the MPC members on holding rates steady in the latest meeting, Mann has expressed a “guarded view” on starting the cutting cycle. Having voted against the 25bps rate cut in August, Mann again voted to hold yesterday.
