Bank Of England’s (BoE) Monetary Policy Committee member Catherine Mann said on Friday, that she voted at this week’s meeting for a 25 basis point rate hike instead of a bigger increase, motivated in part by the fact that inflation expectations began to moderate, reflecting that monetary policy is having an effect.
According to Mann, the decision on interest rates is based on financial conditions. She argued that there is more to come before tight conditions in the United Kingdom. She added that February’s retail sales numbers are pretty robust.
On Thursday, the BoE raised its key interest rate by 25 basis points to 4.25%. The Monetary Policy Committee voted 7-2 for the decision. Two members (Swati Dhingra and Silvana Tenreyro) voted against it, preferring to maintain the rate at 4%.
Market reaction
GBP/USD is falling on Friday, trading around 1.2250, after hitting earlier levels below 1.2200.
BoE’s Mann: Inflation expectations are very important to the outlook
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