Bank of England will keep rates in the context of sticky inflation | articles

The drama is not usually synonymous with the Bank of England. But the February meeting was no less than a bomb. Catherine Mann, who for months had led the opposition to the cuts of fees, surprised everyone with his vote for a 50 -PB rates cut. And that raised the question: if the Arch-Hawk is prepared to vote for faster rates cuts, will the rest of the committee soon follow your example?

Despite all the emotion, the answer seems to be no. Most of the officials who have spoken since then have reached a much more cautious tone. And looking beyond Mann’s vote, the February meeting had a more aggressive flavor. The statement talked about a “careful approach” to facilitate even more. The new forecasts indicated greater inflation this year, despite a strong increase in market rates (which would normally cushion growth and price pressures).

The disagreement is reduced to two things. First, Mann believes in a much more activist approach to establish the policy than his companions. She was more aggressive on tariff walks, and now she has the same opinion about cuts. We sympathize with that opinion; The fixed rate nature of the United Kingdom loans (especially mortgages) means that changes in policies take longer to feed than before. If you believe that the prospects for growth and inflation are changing, then gradual rate cuts are initially much less effective than before.

And that is the second point: Mann believes that the perspective has changed materially. In recent comments, he has talked about the risk of “non -linear” falls in employment, in response to huge tax increases for employers next month.

Certainly, the vibrations surrounding the labor market have worsened dramatically. The survey after the survey has indicated the weakest hiring intentions, while the dismissal conversation has increased. For now, however, that negativity has not appeared in hard data. Companies are required to denounce redundances to the government through an HR1 notification. These have not shown any discernible increase so far.