Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Bank of England could be forced to raise interest rates again, says policymaker

by February 7, 2023
February 7, 2023
Bank of England could be forced to raise interest rates again, says policymaker

A senior Bank of England policymaker has warned the central bank could be forced to keep raising interest rates to prevent high levels of inflation from becoming entrenched in the economy.

Catherine Mann, an independent economist on the Bank’s rate-setting monetary policy committee (MPC), said there were “material upside risks” to inflation sticking at higher levels than expected as the impact of the Covid pandemic, Russia’s war in Ukraine and Brexit weigh on the economy.

In a speech in Budapest on Monday, she said: “The UK suffers not only from the Covid and energy shocks, but also the negative supply shock – the ‘worst of all worlds’.”

Mann, consistently the most hawkish member of the MPC, was outvoted by her colleagues last week as she pushed for a bigger rate increase than the 0.5 percentage point rise announced by the central bank.

With the Bank’s base rate now at 4%, the highest level since 2008, she said further increases would be required. “We need to stay the course, and in my view the next step in Bank rate is still more likely to be another hike than a cut or hold,” Mann said.

Her speech comes amid City speculation that Threadneedle Street is nearing the peak of its most aggressive tightening cycle in decades, after a modest fall in the headline inflation rate and as the economy teeters on the brink of recession. Financial markets expect one more 0.25 percentage point increase this year before Britain’s worsening economic slowdown forces the Bank to cut rates.

Inflation has fallen back from more than 11% in October to 10.5% in December, with most economists forecasting a rapid decline this year as the initial surge in energy prices after the Russian invasion fades in significance for the annual inflation rate.

However, Mann said there were risks inflation had so far stabilised at high levels, which “is not yet the harbinger of a turning point towards a sustainable return to the 2% target” set by the government for the Bank to achieve.

In addition to the Covid pandemic and the energy shock, she said Brexit was also affecting the British economy. “The UK has also been affected by a third type of shock which makes it unique: no other country chose to unilaterally impose trade barriers on its closest trading partners,” she said.

Mann said the risk of inflation remaining higher for longer should force the Bank to err on the side of caution by responding with further rate increases.

“The costs of making a mistake if the true inflation process is more persistent are larger than if the true inflation process is less persistent,” she said.

“A tighten-stop-tighten-loosen policy boogie looks too much like fine-tuning to be good monetary policy. It is both hard to communicate and to transmit through markets to the real economy.”

Read more:
Bank of England could be forced to raise interest rates again, says policymaker

0
FacebookTwitterGoogle +Pinterest
previous post
Google to unveil Bard a direct competitor to ChatGPT as global AI battle hots up
next post
Bank of England and Treasury explore the need for a digital pound

You may also like

JP Morgan’s tell top bankers to work five...

April 13, 2023

eBay UK launches climate training scheme for SMEs

May 12, 2023

Supreme Court ruling blocks car finance payouts for...

August 1, 2025

Fuel Ventures backs PlanningHub’s AI-powered solution to modernise...

February 17, 2025

Leus Family Foundation: Providing opportunity to the UK’s...

October 24, 2023

Scott Bessent attacks ‘Polyanna-ish’ IMF and demands clampdown...

April 24, 2025

8 Strategies to Quickly Grow Your Business

March 21, 2023

Maven backs laser optics pioneer PowerPhotonic with £2.6m...

August 19, 2025

Surprise in month on month house prices rise...

November 1, 2023

Rail industry and RMT to resume talks amid...

January 17, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • XRP price prediction hits new highs, GMO Miner helps you earn $6,800 a day

      August 28, 2025
    • West End retailers lose £310m from VAT-free shopping ban in first half of year

      August 28, 2025
    • Dollar slips as Trump moves to sack Fed governor Lisa Cook in unprecedented clash over central bank independence

      August 28, 2025
    • CDC Director Susan Monarez refuses to be fired as other officials call it quits

      August 28, 2025
    • Bill Gates met with Trump to talk ‘importance of US global health programs and health research’: spox

      August 28, 2025
    • Trump asks SCOTUS to uphold freeze on billions in USAID payments

      August 27, 2025

    Categories

    • Business (8,900)
    • Investing (2,246)
    • Politics (16,503)
    • Stocks (3,228)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved