BoE's Mann: Can't rely on risk premia to do work of policy, need to raise rates
Bank of England (BoE) policymaker Catherine Mann argued on Thursday that they can't rely on risk premia to do the work of monetary policy and added that they need to raise the bank rate, per Reuters.
Bank of England policymaker Catherine Mann stated that they cannot rely on risk premia to substitute for monetary policy and emphasized the need to raise the bank rate, according to Reuters. Her speech received a 9.4/10 rating, significantly higher than her typical 8.1/10, indicating a more forceful policy signal. This shift in stance underscores a preference for explicit Bank Rate increases rather than passive market-driven tightening, particularly when conditions are driven by inflation risk and policy uncertainty.
Mann acknowledged that the Bank of England may have been unclear about its reaction to the Middle East shock and not publishing a baseline forecast in April contributed to market uncertainty. This admission suggests a desire to restore credibility and clarity in future policy actions.
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