**********Mann believes that the current weak demand may lead to a decrease in inflation, therefore it is necessary to adopt larger scale easing measures to adapt to changes in the economic environment. However, other decision-makers warn that interest rate cuts should not be rushed. This policy divergence reflectsThe Bank of EnglandThe different internal judgments on the economic outlook also reflect the complex situation currently facing the UK economy.
Shrinking consumption becomes a key factor in policy shift
According to market research, Catherine Mann, the monetary policy commissioner of the Bank of England, stated that the current economic demand is "significantly weak" and it is difficult for businesses to maintain profits by raising prices, which may further drive down inflation.
Given the current significantly weak demand situation, we need to consider adopting more lenient policies
——Catherine Mann
She previously opposed interest rate cuts due to concerns about inflation risks, but now believes that the economic environment has changed and may require greater monetary easing measures.
Policy divergence: controversy over the magnitude of interest rate cuts
The Bank of England recently lowered its benchmark interest rate by 0.25 percentage points to 4.5%, marking the third rate cut since August last year. However, Mann and another monetary policy committee member Swati Dhingra support a larger 0.5 percentage point rate cut.
From my perspective, it is more effective to convey information about financial conditions through larger interest rate cuts, which can effectively cut off market noise
——Catherine Mann
This viewpoint differs from the position of Andrew Bailey, the Governor of the Bank of England. Bailey emphasized that voting is not a communication tool and called on the market not to "over interpret the voting results". He emphasized that the path of monetary policy should be gradually and cautiously advanced.
Internal Criticism and Policy Adjustment Prospects
Criticism has also emerged within the Bank of England. Monetary Policy Committee member Huw Pill expressed reservations about Mann and Dhingra's hasty push for greater interest rate cuts. He believes that it takes longer to observe the performance of economic indicators before making decisions.
However, Mann believes that this support for a significant interest rate cut is a "single strategic adjustment" and not a continuous trend of interest rate cuts. She will give a speech at the University of Leeds on Tuesday morning UK time to further elaborate on her views.
Editor's viewpoint:
The policy divergence within the Bank of England reflects the multiple challenges currently facing the UK economy. The balance between weak demand and inflation risk has become a core issue in policy-making. Although some decision-makers warn that hasty interest rate cuts may trigger market turbulence, Mann's viewpoint highlights the importance of adopting proactive strategies in complex economic environments.
