By LONDON (Reuters) – High inflation in Britain has not been vanquished and there is a risk that some drivers of price growth could be heading upwards, Bank of England interest rate-setter Catherine Mann said on Wednesday.
“There are some possibilities about downward pressure on inflation coming from export prices coming out of China, for example. But against that … one piece of news that is downward bias, the rest of it is upward bias, and likely to be more volatile going forward over the medium term,” Mann said.
The threat of high U.S. tariffs on imports from China by U.S. President-elect Donald Trump might lead to more Chinese goods heading to Europe at discounted prices, analysts have said.
Mann, speaking at a panel discussion at a conference organised by BNP Paribas (OTC:BNPQY), also said energy prices were more likely to rise than fall and highlighted “pretty sticky” services price inflation in Britain.
She cast the lone vote against cutting borrowing costs at a meeting of the BoE’s Monetary Policy Committee last week which decided by an 8-1 margin to lower Bank Rate to 4.75% from 5%.
The BoE said after last week’s announcement that Mann wanted to wait to see the impact of the new British government’s first budget and increase to the minimum wage, which she thought could boost overall wage growth and businesses’ pricing power.