LONDON – Bank of England policymaker Catherine Mann said on Thursday that she expected inflation would be at the upper end of the range of forecasts published by the central bank earlier this month.
Mann, who has voted for a faster pace of rate increases than most Monetary Policy Committee members this year, said that both wages and underlying prices were rising too fast at present for inflation to return to its 2% target, though not to the extent that there was a wage-price spiral.
BoE forecasts on Nov. 3 showed that under the median path for inflation in the central bank’s model, inflation in two years’ time should be below its 2% target.
But the BoE’s ‘fan chart’ – which puts error bands around these inflation forecasts – showed a 28% chance that inflation would still be above 3% at that point.
“I can tell you that I am in the upper part of that fan, by a lot,” Mann said in a presentation at a central banking conference hosted by King’s College London.
Mann added that she still thought sterling carried a political risk premium, contributing to its weakness against the dollar.