Bank of England policymaker concerned by rise in unemployment

Bank of England interest rate-setter Catherine Mann said British inflation data published this week represented “good numbers” although there was not as much improvement in the underlying figures as the central bank had hoped to see.

Mann, in an interview with Kathleen Hays Presents: Central Bank Central, a podcast, said a recent rise in the unemployment rate was “very much of a concern” and the BoE was getting close “to some sense of where monetary policy is balanced between the inflation objective and full employment.”

Data published this week showed British inflation fell to 3.0 per cent, its lowest since March last year, but a measure of price pressures in the services sector remained strong.

Asked whether she would back a rate cut at the March meeting of the BoE’s Monetary Policy Committee, Mann said she was not sure that a projected fall of inflation to 2 per cent in the coming months meant Britain had fixed its high inflation problem.

“It’s actually pretty hard to tell exactly what is the sustainable or underlying trend rate of inflation, and whether or not the 2 per cent that we are … likely to see coming forward in the next few months is in fact a sustainable 2 per cent,” she said.

Mann voted with the majority in a 5-4 decision by the MPC this month to keep rates on hold. She said at the time that the time for a cut was closer.

Investors were putting the likelihood of a quarter-point rate cut by the BoE in March at about 80 per cent on Thursday.