LONDON (Reuters) -Bank of England interest rate-setter Catherine Mann said she voted to keep borrowing costs on hold last week – having sought a big 50-basis point cut in February – because Britain’s labour market had been more resilient than she expected.
“The first observation is that the labour market has been more resilient. Now, yes, we’ve had some prints that are indicative of a slowing labour market, but it is not a non-linear adjustment,” Mann also told CNBC television on Wednesday.
Data published on Tuesday showed a fall in employment but economists said the drop appeared modest.
Mann also said she was worried that household inflation expectations and goods price inflation had increased.
The BoE cut its benchmark Bank Rate by a quarter of a percentage point on May 8, a decision backed by five of the Monetary Policy Committee’s nine members. Mann and BoE Chief Economist Huw Pill voted for no change while two other MPC members supported a 50-basis point cut.
Mann told CNBC that goods prices at Britain’s borders might fall due to higher trade tariffs imposed by the United States on countries such as China, which could cause exports to be diverted to countries such as Britain.
But retailers would probably be looking for the chance to rebuild their profit margins which could keep pressure on consumer price inflation, she said.
“I need to see the loss of pricing power. I need to see that firms are starting to be much more moderate in setting their prices across a broad range of products,” Mann said. “Goods price inflation is actually going up, not down.”
(Writing by William Schomberg; Editing by Kate Holton)
