Mann: There is a gap keeping consumption steady that could persist to 2023

Question: It looks like hiking cycles are fairly well correlated if you eyeball them, but the model assumes the UK lowers rates in response to a Fed hike, but is this consistent with the correlation in aspect. Also asked when you look at broadening of inflation pressures, it seems odd the BOE are being more timid in hiking rates, particularly in response to other central banks - what is driving the resistance to be more aggressive?

Mann: On the latter: There are important differences in views on the Committee on the degree to which there is resilience in consumption. We use very similar models, but assess the data very different. For some there is a different weight for a significant deterioration in demand - that impacts pricing: firms having to discount etc if demand slows. That impacts the differences to consumption. My view is that there is a gap between consumption and a fall in real income. That gap won't stay for ever. In 2023 that gap may close and consumption slows - that would be when I would change my view on tightening. In terms of challenges - how are the inactive getting back to work is a key question.

On the former: We have to remember there hasn't been a hiking cycle for a very long time. The historic experience is that the UK policymaker doesn't follow the global policy in the model. In our model they do follow. In the market curves, this is a new phenomenon, what we are looking at is market's new assessment on what they think the strategy might be going forward.