MNI BRIEF: BOE's Mann Open To Fast, Forceful Easing In Future
MNI (LONDON) - Independent Bank of England Monetary Policy Committee member Catherine Mann set out the implications of her belief in rate activism at a Society of Professional Economists event on Thursday, saying that after a period of wait-and-see to ensure inflation has diminished she could then back acting "fast and forcefully."
Mann has repeatedly dissented from the prevailing MPC view, which is in favour of gradualism, with rate cuts now widely expected to come at a pace of one per quarter at most. Mann voted against the first two BOE rate cuts but she is holding the door open to moving faster than colleagues later in the cycle. (See MNI BOE WATCH: Cuts 25BP, Sees Slow Return To Inflation Target)
"An activist stance holds the policy rate firmly until sufficient evidence on diminished inflation persistence is revealed; and then to move forcefully," she said, also making the case that inflation volatility is likely to have resulted in a higher neutral rate, or r*, which entails that the degree of policy restrictiveness is less than previously assumed.