MNI BRIEF: BOE's Mann Sees Sticky Services Prices, Fast Wages
MPC's Mann maintains her view that UK labour market too tight to sustainably hit inflation target.
Bank of England policymaker Catherine Mann said Thursday she sees services inflation staying sticky in a tight labor market, while data showing the UK slipped into technical recession at the end of 2023 matched her expectations.
"I always had viewed the second half of the year to be a soft patch. The data already confirmed something I already knew," she told reporters at the National Association for Business Economics conference in Washington. "The economy has slowed somewhat -- technical recession -- and vacancies have come down, but the labor market is still tight." Wage growth indicators are slowing, but "at a pace challenging to get to target-consistent within the target horizon," she said.
The services component of inflation is also decelerating but there's "a long way to go to be target-consistent." Goods prices can sink into deflationary territory but that's not likely to be durable, and some base effects favorable to the deceleration of headline inflation are set to reverse next year, she said.
MPC member Swati Dhingra, the lone vote for a cut in February, will likely discuss the UK inflation at an MNI event on Feb 21. (see MNI INVITE: Livestreamed MNI Connect VC with BoE Dhingra On Feb 21)