The Bank of England warns about the unreliability of reducing inflation

Catherine Mann, a member of the Monetary Policy Committee (MPC) of the Bank of England, urged not to rejoice prematurely, despite the short-term reduction in inflation to the target level. According to her, price growth may accelerate again, and wages will continue to put pressure on inflation. 

Mann stressed that surveys show that companies are planning significant increases in wages and prices for goods and services. «This means that the problem of inflation will not disappear next year,» she said. 

According to Mann, the increasing trend in wage and pricing negotiations may become a structural factor inherent in the high inflation of the last two years. It will take time to fix the situation. 

Although UK inflation reached the 2% target in May and June, analysts predict it will accelerate to 2.3% in July. The Bank of England expects consumer price growth to rise to 2.75% in the second half of the year.

Despite this, the regulator lowered the key interest rate by 25 basis points to 5% at the August meeting. The decision was made with a small margin of votes (5 against 4). Mann was among those who voted to keep the rate at the same level.