LONDON (Reuters) – Bank of England policymaker Catherine Mann said on Tuesday she voted for a half-point interest rate cut last week to “cut through the noise” about the right stance for policy, but said rates needed to remain restrictive.
“Structural impediments to achieving the target on a sustained basis are not yet fully purged. The activist policymaker needs to maintain policy rate discipline and restrictiveness even after this immediate decision,” she said in a lecture at Leeds Beckett University.
“I chose 50 basis points now, along with continued restrictiveness in the future, and a higher long-term Bank Rate to ‘cut through the noise’,” she added.
Mann said she judged the long-term equilibrium interest rate for Britain was at the higher end of a 3-3.5% range.
Mann was one of two members of the BoE’s Monetary Policy Committee who last week voted for a half-point cut in interest rates to 4.25%, against the majority who favoured a quarter-point cut to 4.25%.
Mann’s vote came as a big surprise to investors, as she was previously the most hawkish member of the MPC – though she had also said that at some point her “activist” stance would require a switch to a fast pace of rate cuts at the appropriate time.
(Reporting by David Milliken; Editing by William Schomberg)
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