Latest news with #CatherineLMann
Business News Wales
3 days ago
- Business
- Business News Wales
Inflation Persistence Will Take ‘Some Effort' to Tackle, Says Bank of England's Mann
The 'stickiness' of inflation well above target and the expectation amongst consumers and businesses that it will continue at the same level are problems that will take 'some effort' to resolve, according to a member of the Bank of England's Monetary Policy Committee. Catherine L Mann spoke to Business News Wales during a visit to Cardiff, where she addressed the Board of Cardiff Business Club. She said she agreed with comments made earlier this week by Bank of England Governor Andrew Bailey that the 'path is downward' for the bank rate, which currently stands at 4.25%. The MPC will next meet to consider interest rates on August 7. 'I think the question is – how far and how fast?' said Catherine. 'And I think that's where differences in views on the committee come from – a difference in assessment of where the demand conditions really are and how that's playing out in the labour market with respect to employment prospects and shedding of labour. 'That's on the one hand definitely a concern that I have as well. On the other side, there is the persistence of inflation, and the stickiness of inflation well above target, and the questions that I have in my decision making (are): what is it that's going to be an important part of the process of bringing inflation back down to target, and how fast will that happen? 'My view is that it's going to take some effort to get inflation down.' The UK consumer prices index (CPI) rose to 3.6% last month, according to the Office for National Statistics – the highest recorded since January 2024. The Bank of England's target rate is 2%. Consumers and businesses now have embedded inflation expectations, said Catherine, as wage and pricing inflations continue to run above target. Economic growth – a key priority for both UK and Welsh Governments – needs to be supply-side driven to avoid inflation rising further, she warned. 'When I think about growth as a central banker, what I want to see is supply side growth, and the demand will come along with it,' said Catherine. 'Without supply side growth, demand is a sugar high, and it does not end well.' Achieving supply-side growth was 'challenging', she acknowledged, adding that creating the right environment for productivity growth with a focus on innovation and business investment is key. The labour market element of the supply-side of the economy needs to be 'robust' to enable economic growth, and this is currently one of the most significant concerns, said Catherine. A wide-ranging discussion with the Cardiff Business Club Board included debates on the labour force, skills and training and issues around productivity. Earlier this week Catherine visited Newport where she took part in a Bank of England citizens' panel event. It was part of the Bank's Citizens' Forum Programme, which is designed to gather information from local people to complement existing data and analysis, and help inform the Bank's policy decisions. Discussions at the citizens' panel focused on the cost-of-living and the housing market.
Euronews
10-02-2025
- Business
- Euronews
Bank of England cuts key interest rate as pound drops and stocks rally
The Bank of England (BoE) lowered its key interest rate by 25 basis points to 4.5% on Thursday, marking the third cut since the easing cycle began in August last year. The widely expected move reflects progress in curbing inflation, though policymakers remain cautious about lingering price pressures. Seven members of the Monetary Policy Committee backed the quarter-point cut, while two – Swati Dhingra and Catherine L Mann – advocated for a larger 50-basis-point reduction. Inflation outlook: Progress, but risks remain The BoE noted significant progress in reducing inflation over the past two years, aided by easing external shocks and the restrictive monetary stance. However, it warned that inflationary pressures have not fully dissipated. Consumer price index (CPI) inflation stood at 2.5% in the fourth quarter of 2024, with domestic inflation moderating but still above target. Higher energy costs and regulatory price adjustments are expected to push CPI inflation to 3.7% by the third quarter of 2025 before gradually returning to the 2% target. The central bank signalled that monetary policy would need to stay restrictive for some time, balancing the risk of inflation reaccelerating with the need to support an economy that has struggled to regain momentum. Sluggish economic growth and trade risks The UK economy has underperformed expectations, with GDP growth weaker than forecast in the November Monetary Policy Report. Business investment and consumer confidence have softened, creating further uncertainty about the country's growth outlook. The BoE expects GDP to improve from mid-2025 onwards. The bank also acknowledged growing risks from potential US trade tariffs, which could impact the UK's exports and investment climate. The US is the UK's second-largest trading partner after the EU, accounting for 22% of gross exports – around £190 billion (€223 billion) or 7% of GDP. While nearly 70% of UK exports to the US are services, which would not be directly affected by goods tariffs, the BoE cautioned that broader trade restrictions could impact UK firms. Investment uncertainty linked to trade policy could also weigh on growth. Market reaction: Sterling weakens, FTSE 100 hits record highs The pound fell 1% against the US dollar, trading at $1.2380, marking its worst daily performance since early January. The euro strengthened 0.6% against sterling to 0.8365. UK government bond yields declined, with the two-year gilt yield falling five basis points to 4.10%, while the 10-year yield dipped 2 basis points to 4.42%. Equity markets rallied on the rate cut, with the FTSE 100 surging 1.5% to a record 8,755 points, extending its monthly gains to 6%. Leading the index were Anglo American (+6.8%), AstraZeneca (+5.1%), and Antofagasta (+5%).
