BoE’s Mann says she’s ready to raise rates if inflation outlook worsens

Published 6 days ago 25 sources

Bank of England policymaker Catherine Mann said Thursday she is prepared to vote for an interest rate increase if inflation expectations deteriorate further in the aftermath of the U.S.-Iran war, reinforcing her position as one of the most hawkish voices on the Monetary Policy Committee.

“If outturns — especially in expectations — are unfavourable to the underlying inflation process, an activist move can bring inflation expectations and outcomes toward the 2% target,” Mann said in a speech text released ahead of an event hosted by Natixis in London. wtvbam.com

BoE's Mann says she's ready to raise rates if inflation outlook worsens

A Hawkish Hold

Mann voted to keep interest rates on hold at 3.75% at the MPC’s June meeting as part of a 7-2 majority but viewed upside risks to inflation as more prominent than downside risks to economic activity. Two members of the committee voted for a 25-basis-point increase to 4% at that meeting. bankofengland.co.uk wtvbam.com

According to Reuters, Mann said she had held off voting for a rate rise so far because the Iran war had already pushed up market interest rates in Britain, effectively tightening financial conditions without the need for an explicit policy move. The Bank of England has characterized its current stance as an “active hold,” judging that tighter financial conditions provide insurance against inflation risks. mufgresearch.com streetinsider.com whtc.com

Data in the Second Half Will Be Decisive

Mann’s comments point to the second half of 2026 as a critical period for determining whether rate increases become necessary. The June MPC minutes noted that Mann would “continue to evaluate measures of inflation expectations” and believes “an activist hike could be needed”. tradingview.com

Wage deals and inflation expectations data will be central to her assessment. The BoE’s next rate decision is scheduled for July 30, followed by meetings in September and November. Some economists, including those at Bank of America, have argued that multiple rate hikes remain possible this year, likely in July and September, though MUFG dropped its call for tightening in June after the U.S.-Iran ceasefire deal eased energy prices. global.morningstar.com mufgresearch.com

Broader Policy Context

The pound found support from Mann’s remarks, which underscored a higher bar for rate cuts even as the UK economy contracted in April under the weight of war-related disruption. Mann has long advocated for an “activist” approach to rate-setting, arguing the MPC should be willing to make larger moves in either direction to anchor inflation expectations amid geopolitical volatility. cityam.com global.morningstar.com

The next test for the committee will come later this month when fresh inflation data and labor market figures reveal whether the energy shock from the Middle East conflict is feeding through into broader price pressures across the UK economy.