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The Bank of England should lift interest rates in chunkier instalments as a flailing pound is heaping more inflationary pressure on the UK, a policymaker said on Monday.
Catherine Mann was one of three members of the BoE's nine-strong Monetary Policy Committee to vote for a 50 basis point rate increase at last week's meeting.
In the end, the BoE voted to raise the Bank Rate by a quarter-point to 1.25%.
Mann said on Monday: ‘I voted for a 50 basis point increase at the last MPC meeting. In my view, a more robust policy move, based on both domestic conjuncture and commensurate with the global factor, reduces the risk that domestic inflation already embedded is further boosted by inflation imported via a sterling depreciation.
‘I open the door to a policy rate reversal in the medium term when the domestic supports to demand fade and when weakness in external sources of demand bite. In my view, this monetary policy path supports an inflation-output combination superior to that of the historical reaction.’
Rate hikes from the US Federal Reserve has heaped pressure on the pound. Sterling fetched $1.2245 on Monday afternoon in London, down sharply from around $1.35 at the start of the year.
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