© Reuters. FILE PHOTO: Economist and member of the Bank Of England’s Monetary Policy Committee Catherine Mann poses for a photograph ahead of a speech at Manchester Business School in Manchester, Britain, January 12, 2023. REUTERS/Phil Noble/File Photo
By Howard Schneider and David Milliken
WASHINGTON (Reuters) – Bank of England policymaker Catherine Mann said she was not surprised by weak economic data released on Thursday that showed the British economy slipped into recession last year, but she viewed the growth outlook for 2024 as brighter.
“I always had viewed the second half of the year to be a soft patch. And so in my view, the data are just confirming something that I already knew,” she told reporters at a conference hosted by the United States’ National Association for Business Economics.
Mann said she was focusing instead on more forward-looking business surveys such as the purchasing managers’ index and the BoE’s Decision Maker Panel.
“Those are all looking good,” she said.
Mann was one of two members of the BoE’s Monetary Policy Committee to vote this month for a further increase in interest rates due to ongoing inflation risks, although she said last week that her decision to do so was “not easy”.
Earlier on Thursday, MPC member Megan Greene – who until this month had voted with Mann for higher rates – said she had been encouraged by signs inflation was proving less persistent, though it had further to fall before rates could be cut.
Mann said she remained concerned that services price inflation was stickier in Britain than in other advanced economies, and said falling goods price inflation alone would not keep consumer price inflation at 2% on a lasting basis.
CPI was twice the BoE’s 2% target in December and January, and although the central bank expects lower energy prices to push it down to 2% in the second quarter of this year, a rise back towards 3% is forecast for the end of the year.
Many British businesses were operating at lower profit margins than their investors and lenders wanted, putting medium-term upward pressure on inflation, Mann said.
“They need and they want to rebuild those margins … just like workers would like to have higher wages so that they get back to the real wages they would like to have,” she said.
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