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BOE’s Mann Sees 100 Basis Points of Cuts as Too Aggressive

By Irina Anghel
Catherine Mann, member of the monetary policy committee at the Bank of England (BOE), during a Bloomberg Television interview in London, UK, on Tuesday, March 7, 2023. Mann said the pound could weaken further in the coming months as investors absorb the implication of the US Federal Reserve and European Central Bank’s plans to raise interest rates. (Hollie Adams/Bloomberg)

(Bloomberg) -- Bank of England official Catherine Mann said cutting rates by a percentage point over the next year would fan inflation, placing her in opposition to her newest colleague and the “gradual” approach endorsed by the majority on the Monetary Policy Committee.

“100 basis points, see that is too aggressive,” Mann said, speaking at a Brown Brothers Harriman event on Thursday. “That would not be consistent with my view on prospects for demand conditions going forward and the underlying inflation persistence.” 

Mann was responding to a question about comments made this week by fellow MPC member Alan Taylor, who suggested “gradual” meant reducing rates once a quarter. Money markets are pricing in around 70 basis points of cuts, implying two reductions and a strong possibility of a third.  

Mann endorsed a so-call “activist” approach, which implies holding rates for longer, then delivering a larger cut once it was clear that “underlying inflation dynamics” had changed. The nine-member MPC cut rates for a second time this year on Nov. 7, with Mann the only dissenter. 

At the other end of spectrum, Taylor and Deputy Governor Dave Ramsden have signaled an openness to faster interest-rate cuts, with Ramsden singling out labor market developments as key in comments to the Yorkshire Post published Thursday.

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