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6d ago

Bank of England Divided Over Rate Cuts as Goods Inflation Persists

A slim majority at the May MPC meeting backed a 0.25% rate cut, while Catherine Mann and Huw Pill argued for holding rates at 4.5% due to rising goods prices and strong labour market dynamics.

Economist and member of the Bank Of England’s Monetary Policy Committee Catherine Mann poses for a photograph ahead of a speech at Manchester Business School in Manchester, Britain, January 12, 2023. REUTERS/Phil Noble/File Photo

Overview

  • The Bank of England's Monetary Policy Committee voted 5-4 to reduce interest rates by 0.25 percentage points to 4.25% at its May 2025 meeting.
  • Catherine Mann and Huw Pill opposed the cut, citing concerns over rising goods price inflation and the resilience of the UK labour market.
  • Mann emphasized that firms must demonstrate reduced pricing power and moderation in price-setting before further rate cuts are justified.
  • March inflation fell to 2.6%, but goods inflation rose to 0.6%, highlighting sectoral divergence in price trends.
  • The Bank of England is navigating pressures from persistent wage growth, global trade tensions, and uneven inflation declines across sectors.