MNI BRIEF: Climate Changes Ups Inflation Pressure - BOE Mann​​

Policymakers must factor in climate change shocks, which increase inflation and inflation persistence, into their decision irrespective of whether they are explicitly included in the central bank's mandate, Bank of England Monetary Policy Committee member Catherine Mann said.

In the text of her Oxford University speech Mann said that the MPC's current mandate, of keeping inflation sustainably at 2%, required her and her colleagues to factor in the impact of climate change and that the debate over whether climate change should feature in the Bank's mandate is an irrelevance. Research "points to increased inflation, increased inflation persistence, and increased inflation volatility associated with climate shocks, policies, and spillovers" and the existing inflation targeting mandate requires her to respond to such shocks, Mann said.

This includes both the direct impacts of extreme weather events and the effects of moving to net zero, she said. Mann has consistently been at the hawkish end of the MPC spectrum, pushing for more rapid tightening and against calling a peak in the policy rate at the current 5.25% level.