BoE’s Mann says markets are pricing in too many rate cuts


People walk outside the Bank of England in London, Britain, September 21, 2023. REUTERS/Peter Nicholls/File Photo

LONDON (Reuters) — Bank of England policymaker Catherine Mann, who last week dropped her call for increases in borrowing costs, said on Tuesday she thought markets were betting on too many interest rate cuts by the British central bank.

«I think they’re pricing in too many cuts, that would be my personal view,» Mann told Bloomberg TV, referring to financial markets which are almost fully predicting three quarter-point reductions in rates by the BoE this year.

«I think that there has been a substantial easing even since the vote last week, and I think that perhaps markets are a bit too complacent about how long they think the BoE overall, the MPC, will hold rates.»

Last week she joined the majority of the Monetary Policy Committee’s (MPC) members who kept Bank Rate at 5.25%, its highest since 2008. She had previously voted for an increase to 5.5%.

Mann said she changed her mind due to consumers turning more reluctant to pay higher prices, especially for services such as hospitality and travel, and because firms were cutting hours of workers at a time when the government’s cuts to social security rates would add to the number of workers in the labour market.

Mann said pricing in financial markets was helping the BoE do its work for it.

«In some sense, I don’t have to cut because the market already is, in terms of the implications of you know the market curve and mortgage rates, for example,» she said.

«Those are the rates that are faced by borrowers. Bank Rate is not the rates that borrowers face.»

Source

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