Bank of England Monetary Policy Committee member Catherine Mann has called for an activist monetary policy approach, arguing that proactive adjustments are needed to steer inflation expectations back to the 2% target. Her remarks come as the BoE's latest Decision Maker Panel survey reveals UK businesses' year-ahead own-price inflation expectations climbed to 4.1% in June, up from 3.9% in May.
Mann, a known hawk on the MPC, warned that delaying action could allow inflation expectations to become entrenched, potentially driving a self-fulfilling cycle of higher wages and prices. She signaled that an activist stance could mean a higher peak in interest rates or a slower easing cycle, directly impacting mortgage rates, business borrowing costs, and consumer spending.
The DMP survey's 4.1% reading indicates persistent corporate pricing pressures well above pre-pandemic norms of 2-3%. This development is likely to reinforce the BoE's cautious stance on rate cuts, as policymakers watch for signs that underlying inflation is sustainably returning to target. Together, these signals point to a prolonged period of elevated borrowing costs, dampening prospects for immediate monetary easing and potentially weighing on risk assets, including cryptocurrencies, as liquidity remains tight.
