BoE MPC member Catherine Mann explained her notable policy shift during an interview with CNBC, revealing why she moved from backing a 50bps rate cut in February to voting for a hold at last week’s meeting.
Mann cited the UK labor market’s resilience as a key factor in her reassessment. While recent data suggest some moderation “a slowing labor market”, she argued that “it is not a non-linear adjustment.”
Mann also flagged a new risk emerging from tariffs. She warned that rising US tariffs on countries like China could lead to an influx of diverted exports into markets such as the UK. While this could temporarily ease goods prices at the border, she cautioned that domestic retailers may use the opportunity to rebuild profit margins, keeping upward pressure on consumer price inflation rather than alleviating it.
Crucially, Mann emphasized the need to see a broad-based “loss of pricing power” in firms. “I need to see that firms are starting to be much more moderate in setting their prices across a broad range of products,” she added. “Goods price inflation is actually going up, not down.”
