Bank of England Warns Higher Interest Rates Needed to Combat Persistent Inflation

Catherine Mann of the Monetary Policy Committee highlights risks from public sector pay rises and sluggish productivity.

Catherine Mann, a member of the Bank of England's Monetary Policy Committee, argues that higher interest rates are necessary to address persistent inflation risks.
Mann's comments come after the Bank of England decided to keep the base rate at 5%, following a recent cut from 5.25% last month.
Public sector pay increases, including a 22% rise for junior doctors and nearly 15% for train drivers, are seen as contributing to inflationary pressures.
Mann emphasizes that services price inflation in the UK has been more persistent compared to the US and eurozone, necessitating prolonged restrictive monetary policy.
Higher interest rates are particularly impacting middle-income households, with rising housing costs squeezing consumer spending.