rising unemployment — rising unemployment — Bank of England policymaker Catherine Mann has expressed concern about the recent rise in unemployment, highlighting the challenges the UK economy faces despite promising inflation data.
In her recent interview on the podcast “Kathleen Hays Presents: Central Bank Central”, Mann described the latest inflation figures as “good numbers”. However, she noted that there wasn’t sufficient improvement in the underlying data that the central bank had anticipated.
This week, data revealed that British inflation had dropped to 3.0 per cent, the lowest level since March of the previous year. Nevertheless, pressure on prices within the services sector remained notably strong.
Mann’s comments come as the Bank of England grapples with balancing its inflation objectives against the necessity of maintaining full employment. She remarked that the recent uptick in unemployment was “very much of a concern”, signalling a potential shift in the economic landscape.
When probed about the possibility of a rate cut during the upcoming March meeting of the Monetary Policy Committee, Mann expressed uncertainty. She indicated that while inflation might be projected to fall to 2 per cent in the coming months, it was questionable whether this would signify a permanent resolution to the high inflation issue that has plagued the UK economy.
“It’s actually pretty hard to tell exactly what is the sustainable or underlying trend rate of inflation,” Mann explained. “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 remains to be seen.”
In the recent Monetary Policy Committee meeting, Mann voted alongside the majority in a narrow 5-4 decision to keep interest rates unchanged. At that time, she indicated that the moment for a rate cut was approaching.
Current market expectations suggest an 80 per cent likelihood of a quarter-point rate cut by the Bank of England in March, reflecting growing anticipation among investors as they monitor the evolving economic situation.
