Bank of England Monetary Policy Committee member Catherine Mann said late Thursday that gradual interest-rate moves no longer send clear signals to volatile financial markets and larger shifts are now needed to “cut through” the noise for the good of the economy, per Bloomberg.
Key quotes
Monetary policy must navigate through choppy financial markets, shock-ridden economies, and sticky expectations.
Larger cuts, such as the one I voted for in the latest meeting, cuts through this turbulence, with the objective to more effectively communicate the stance of policy and influence the economy.
Incoming data on wage and price developments and one-year ahead expected trajectories are not yet target-consistent.
I have emphasized the need to hold a restrictive Bank Rate for longer to discipline this upward bias – and I still believe this.
The need to remain restrictive is particularly important.
The founding premise for a gradualist approach to monetary policy is no longer valid.
Market reaction
At the time of writing, the GBP/USD is trading 0.07% higher on the day to trade at 1.2887.
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