MNI BRIEF: Warning Signs Of 2nd Round Infl'n In UK - BOE Mann

Higher inflation was becoming embedded in the UK, with market expectations showing inflation staying elevated with firms' inflation and wage expectations for 2022 both up at around 5%, Bank of England Monetary Policy Committee member Catherine Mann told a Cleveland Fed event.

She noted that markets were "front-loading" sterling rate expectations with some easing expected down the line. She said that while in the US and euro area market expectations are for inflation to fall back in future years "in the UK they are more elevated" She said the mix of firms and markets embedding of higher inflation fed through into "the potential strategy for monetary policy."

Mann was in the minority backing a 50 basis point hike at the February MPC meeting and her concern over rising expected inflation was a factor in her decision to back more aggressive tightening at the start of the tightening cycle.