Bank of England Monetary Policy Committee member Catherine Mann expressed on Thursday that gradual interest rate moves are no longer effective in signaling policy intentions to volatile financial markets. According to Mann, more substantial rate shifts are needed to cut through the noise and stabilize the economy.
Key Quotes from Mann’s Speech:
Navigating Financial Volatility: Mann highlighted that monetary policy must be adjusted to navigate through turbulent financial markets, shock-ridden economies, and persistent expectations of inflation.
Larger Cuts for Clarity: She emphasized that larger rate cuts, like the one she voted for in the latest meeting, are more effective in signaling the Bank’s stance on policy and in influencing the economy in the current climate.
Wage and Price Developments: Mann noted that current wage and price data, along with expected trajectories for the year ahead, are not yet aligned with the Bank’s inflation targets.
Need for Restrictive Policy: She reiterated her belief in maintaining a restrictive Bank Rate for longer to curb the upward inflationary bias in the economy.
End of Gradualist Approach: Mann asserted that the original rationale for a gradual approach to monetary policy is no longer valid and that more decisive action is required.
Market Reaction: Following her remarks, the GBP/USD pair saw a slight 0.07% increase, trading at 1.2887, indicating a mild positive market response to the suggestion of more aggressive policy moves from the Bank of England.
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