BoE's Mann Warns Supply Shocks Are Making UK Inflation More Permanent, Signals Proactive Rate Hikes

Bank of England Monetary Policy Committee member Catherine Mann warned on October 6 that supply shocks are embedding inflation more permanently into the UK economy, rather than proving transitory. She said there is an upward bias to inflation that she must actively address, signaling a hawkish stance toward interest rate policy.

Mann acknowledged that UK economic demand is not strong but remains positive, and crucially assessed that the UK labor market is not weak enough to bring inflation under control on its own. She signaled support for proactive rate hikes as the preferred tool to stabilize inflation expectations, even at the risk of weighing on consumer and business confidence.

Separately, ECB Chief Economist Philip Lane offered a contrasting note, saying the European Central Bank is not seeing strong second-round inflation effects, suggesting a divergence in how policymakers on each side of the English Channel are reading the inflation outlook.