(Reuters) -Bank of England policymaker Catherine Mann said companies will struggle to raise prices this year as consumers are hit by job losses and spending softens, the Financial Times reported on Tuesday.
Price increases in the year ahead would be consistent with the bank’s target, Mann said in an interview with the newspaper, adding that data is pointing to a “non-linear” fall in employment.
The BoE’s target for inflation is 2%. The bank expects inflation to be almost double its target this year.
Mann, previously the most hawkish member of the Monetary Policy Committee, joined Swati Dhingra last week to seek a bigger interest rate reduction to 4.25%. The bank last week cut its rate by a quarter of a percentage point to 4.5%.
Mann told FT that a half-point move had been needed to “cut through the noise” and make clear to traders the need for easier financial conditions.
“To the extent that we can communicate what we think are the appropriate financial conditions for the UK economy, a larger move is a superior communication device, in my view,” she said.
Mann told the FT she would be waiting for signs to be confident to that this year’s spike in inflation does not lead to companies boosting wages, which could further fuel price growth.
“I have to ensure that those second-round effects do not emerge. And I will need some more data to make that judgment,” she said.
The move by the Bank of England last week to halve its 2025 growth outlook, was a blow for finance minister Rachel Reeves who is pushing to speed up the economy.
(Reporting by Nilutpal Timsina in Bengaluru; Editing by Tom Hogue, Leslie Adler and Gerry Doyle)
