BoE MPC member Catherine Mann said, “falling natural gas and electricity costs “might be good from the standpoint of making households feel more comfortable.”
But, “on the other hand, what they aren’t going to spend on energy, they’re going to spend on something else… That translates something that I do not control, which is external energy prices, into something that looks a whole lot more like what I’m supposed to control, which is domestically generated inflation.”
“A recession is a particularly dramatic way of disciplining the pricing structure of firms, but it’s not the only way,” Mann said. “I would like to see more on the supply side in order to give us a faster speed limit to work with as a central bank. It’s not like there’s an automatic relationship between recessions and bringing inflation down.”
