UK markets closed
  • FTSE 100

    7,389.98
    +87.24 (+1.19%)
     
  • FTSE 250

    19,835.95
    +146.93 (+0.75%)
     
  • AIM

    956.64
    +9.47 (+1.00%)
     
  • GBP/EUR

    1.1822
    +0.0040 (+0.34%)
     
  • GBP/USD

    1.2495
    +0.0020 (+0.16%)
     
  • BTC-GBP

    24,107.32
    +487.09 (+2.06%)
     
  • CMC Crypto 200

    650.34
    -23.03 (-3.42%)
     
  • S&P 500

    3,901.36
    +0.57 (+0.01%)
     
  • DOW

    31,261.90
    +8.77 (+0.03%)
     
  • CRUDE OIL

    112.70
    +0.49 (+0.44%)
     
  • GOLD FUTURES

    1,845.10
    +3.90 (+0.21%)
     
  • NIKKEI 225

    26,739.03
    +336.19 (+1.27%)
     
  • HANG SENG

    20,717.24
    +596.56 (+2.96%)
     
  • DAX

    13,981.91
    +99.61 (+0.72%)
     
  • CAC 40

    6,285.24
    +12.53 (+0.20%)
     

UK interest rates rise unlikely after record inflation, hints BoE policy member

·Finance Reporter, Yahoo Finance UK
·2-min read
UK interest rate
Bank of England's Monetary Policy Committee will meet after two weeks to vote on UK interest rates. Photo:Toby Melville/Reuters

Soaring inflation has put the Bank of England (BoE) on a “shallower path” regarding an interest rate hike as it needs to lean against inflation pressures, according to a member of BoE's Monetary Policy Committee (MPC).

Catherine Mann, an external member of MPC, said on Friday that expectations for prices and wages, if realised, are ingredients for inflationary pressures that could stay strong for longer, perhaps well into 2023. Residual strength in both wages and prices are likely to continue well into 2022, she added.

Inflation now stands at 5.4%, the highest in nearly 30 years, adding pressure over interest rates as the next decision is due in just over two weeks.

Many economists think inflation will go higher than the BoE's most recent estimate of a peak of around 6% in April.

Read more: Inflation: Price rises may last until 2023, warns Bank of England governor

Mann said that current price and wage expectations are “inconsistent” with the BoE’s 2% inflation target.

"To the extent that monetary policy actions now dampen expectations, and ... that any deceleration of global prices is passed-through to UK inflation, and to the extent that financial markets are already cautioning decisions, the next steps could exhibit a shallower path," Mann said.

"We aim to bring inflation back down to target such that workers can enjoy real wage gains from their labour."

Still, she said, she awaits further research briefings before making up her mind on any rate rise vote.

Read more: UK inflation hits 30-year high as cost of living squeeze looms

"In my view, the objective for monetary policy now should be to lean against this 'strong-for-longer' scenario," she added in a speech to the OMFIF central banking think tank.

Mann was among the MPC majority who voted to raise rates in December.

Several economists expect the BoE to raise rates again to 0.5% on 3 February, after having increased it to 0.25% in December for the first time in over three years.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting