The Bank of England should have announced a bigger change to interest rates last week to “cut through the noise” and deliver a swift shot in the arm for the economy, one of its rate-setters has said.
Catherine Mann, an external member of the monetary policy committee (MPC), the nine-member panel that sets the level of base rate, said that she voted for a bigger rate cut of 50 basis points to quickly ease financial conditions in the UK.
The Bank of England had previously lowered the base rate twice by 25 basis points since August, from 5.25 per cent to 4.75 per cent. Mann said that these actions “had not appreciably loosened financial conditions”, leading her to vote for an outsized rate cut.
Last week the MPC voted 7-2 in favour of cutting the base rate by a quarter of a percentage point to 4.5 per cent, with Mann and Swati Dhingra, another external member, favouring a 50 basis-point reduction.
The Bank of England also halved its 2025 UK growth forecast to 0.75 per cent from 1.5 per cent and said that inflation would rise sharply to a peak of 3.7 per cent in the summer from…
