Bank of England's Mann says high inflation has become 'embedded' in UK economy
BoE rate-setter Catherine Mann told a TS Lombard conference on Tuesday that inflation running above the 2% target has become embedded in the British economy, warning it could hit 4% around the turn of the year.
Inflation running above the Bank of England’s 2% target appears to have become embedded in the British economy, BoE policymaker Catherine Mann said on Tuesday.
“We’ve had inflation well above target for the entire time I’ve been in my position… Inflation has become embedded,” she told a conference hosted by economic advisers TS Lombard, according to Reuters (https://www.reuters.com/business/bank-englands-mann-says-high-inflation-has-become-embedded-uk-2026-10-06/).
Mann said she was particularly concerned that inflation looked set to hit 4% around the turn of the year — the period when most employers and workers negotiate wage increases — potentially entrenching price rises further through second-round effects.
Since July, Mann has been part of a minority on the Monetary Policy Committee voting for a quarter-point rise in interest rates to 4%. The MPC voted six to three to leave rates on hold at its September meeting, with Chief Economist Huw Pill and external member Megan Greene joining Mann in voting for an immediate increase. Inflation stood at 3.1% in the year to August, and the committee has projected price growth could exceed 4% in early 2027 (https://bbc.bm/bank-of-england-shifts-tone-toward-rate-hikes-as-inflation-set-to-top-4).
Mann’s intervention comes three weeks before Chancellor John Healey delivers his first budget on October 28, with the government under pressure to set out how it will meet the NATO defence spending commitment while reassuring markets on fiscal discipline (https://www.reuters.com/world/uk/uk-pm-weighs-delay-roadmap-higher-defence-spending-times-reports-2026-10-06/).
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