Bank of England (BoE) policymaker Catherine Mann revealed on Tuesday that she supported a half-point interest rate cut last week, a move designed to "cut through the noise" regarding the correct policy stance. However, she emphasized that rates must continue to be restrictive.
During a lecture at Leeds Beckett University in northern England, Mann highlighted that structural barriers to consistently achieving the inflation target are not entirely eliminated, Reuters reported.
She stressed the need for an "activist policymaker" to uphold policy rate discipline and restrictiveness, even after this immediate decision.
Mann opted for a 50 basis point cut now, coupled with continued restrictiveness in the future, and a higher long-term Bank Rate to clear the confusion. She dismissed the gradualist approach favored by most policymakers.
Mann had previously indicated that her "activist" stance would eventually necessitate a shift to a faster pace of rate cuts when the time was right. She estimated that the long-term equilibrium interest rate for Britain is at the higher end of a 3-3.5% range.
Last week, the BoE cut its growth forecast for 2025 to 0.75%. However, it also projected that inflation would increase from 2.5% in December 2024 to approximately 3.7% by the third quarter of this year.
