MNI BRIEF: Core Inflation Is The Key Measure: BOE Mann

Core inflation, rather than headline, is a better indicator of whether inflation stability is achieved in the medium term, Bank of England Monetary Policy Committee member Catherine Mann said Wednesday.

Mann told an event hosted by banking group Pictet that there are big gaps between headline and core inflation and the interest rates required for real economy stability and financial stability -- r-star and double-r-star -- adding that these gaps are making policymakers' jobs harder and heighten the risk of "things breaking." Core inflation has proven stubborn in the UK in recent data sets while headline appears to have turned the corner.

Mann said that in setting policy there should be "a little bit more elasticity to deal with what I know is going to be a choppy environment, partly because of financial instability, partly because of the underlying choppiness of the economic environment." She cited asymmetries in inflation processes and persistence as concerns and warned of the risk of accidents happening. Mann has voted largely for faster tightening than the majority on the MPC and rejected criticism of not acting early enough.