Catherine Mann MPC7 Mar 2025 07:32
“The Bank of England must slash interest rates to shore up the struggling economy, a top policymaker has warned, rejecting Andrew Bailey’s call for “gradual and careful” steps on borrowing costs.
Catherine Mann, a member of the Monetary Policy Committee, said the economy was already weak and set to get worse as families and businesses cut back on spending.
Ms Mann warned of “extensive weakness” in the private sector and consumer demand. The Bank’s surveys show bosses are slashing jobs “as firms address the multi-year accumulation of increased labour costs”, she said.
Ms Mann voted for a bumper 0.5 percentage point rate cut in last month’s policy meeting but she was outvoted in a seven-to-two split. The majority, including Mr Bailey, the Governor, backed a 0.25 point cut to 4.5pc.
Her call for larger cuts runs counter to the “gradual” approach advocated by the Governor. Mr Bailey has called for “a gradual and careful approach to the further withdrawal of monetary policy restraint”.
Her fears stem from the Bank’s surveys of business leaders. Those surveys include questions on next month’s £25bn increase in the National Insurance contributions paid by employers on their workers’ pay packets. The results indicate more than 50pc of companies expect to employ fewer workers as a result. 61pc expect to charge customers higher prices to cover the cost of the tax, and 63pc anticipate lower profits.
People have begun to save more to guard against fears they will lose their jobs. Extra saving, while potentially good for each individual household’s position, risks draining more spending from the economy, slowing growth and leading to more unemployment.”
I thought the MPCs job was to get inflation to 2%, not bail out this government from the mess it is making of running the economy ? 🤔
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