Interest rates will need to rise again, warns MPC member

The MPC has increased its base interest rate 10 times since December 2021 to 4% to dampen consumer spending and limit the increase in the consumer prices index, which hit 10.1% in January.

Mann is a former investment bank economist who joined the nine-member MPC in 2021, she has consistently argued against her colleagues for a sharper increase in interest rates in order to tame inflation.

Mann was a lone voice on the committee calling for a 75-bsp increase, amid the discussion that led to the MPC lifting rates by half a percent, from 3% to 3.5% in December.

In a speech at the Resolution Foundation’s headquarters in London, Mann argued that high interest rates were needed to prevent inflation becoming embedded in wages and prices. She warned this could lead to “extended persistence of inflation into this year and the next”.

Mann said: “We have an inflation remit, and we will achieve it one way or another … Failing to do enough now risks the worst of both worlds – higher inflation and lower activity – as monetary policy will have to stay tighter for longer to ensure inflation returns sustainably back to the 2% target.”

Analysts from Citi have forecast that inflation will fall to about 2% by the end of the year, well below the 4% prediction by the central bank.