Categories: Finances

Falling headline inflation, high core, make policy difficult By Reuters


© Reuters. FILE PHOTO: 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

WASHINGTON (Reuters) – Falling energy prices will lower headline inflation towards the Bank of England’s 2% target, but persistent underlying inflation will make it hard for the Bank of England to set monetary policy as the year progresses, Bank of England monetary policy committee member Catherine Mann said on Wednesday.

“Gas prices in particular are on the down slope, and that type of dynamic is going to be very important in driving headline inflation down,” Mann said in remarks to a National Association for Business Economics meeting.

But “core goods and services are trending up … It is going to make it very difficult to do our job,” since the BoE’s 2% target is formally set in relationship to headline inflation, not the higher, more persistent, core number, she said.

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