Bank of England policymaker pledges to ‘move big’ when ready to cut rates

A policymaker at the Bank of England has said she will “move big” on interest rate cuts when it is clear that persistent pressures on UK inflation have been eliminated.

Catherine Mann, an economist and member of the Bank’s Monetary Policy Committee (MPC), has not yet opted to reduce rates.

This is despite the majority of the MPC voting for a cut in August and again in November, taking the base rate down to 4.75%.

Ms Mann, speaking on the Female Central Bankers panel at the BNP Paribas Global Markets Conference, said she takes an “activist” stance on the nine-member committee.

This is because she believes price rises should not be embedded into the UK economy following a period of high inflation.

Ms Mann said: “Last vote, I chose to hold, as opposed to cut with the rest of the committee, because, in my view, there is outside risk to inflation, already embedded potentially going forward… and in that environment it is important to hold for longer.

“And then, when I have evidence that there has been a removal or sufficient moderation of inflation persistence, then I will move at a bigger step.”

The economist said monetary policy can “have an immediate effect on pricing decisions of firms and an immediate effect on inflation expectations” which she described as “critical” to consider when setting rates.

“That is why part of my activist strategy is, when I move, I will move big,” she said.

Last week, Bank of England Governor Andrew Bailey said a “gradual approach” is needed to cutting interest rates so the MPC can assess various economic factors including the Government’s tax plans.