BoE MPC member Catherine Mann explained in a speech that her for a 50bps last week. She said, ” a more robust policy move, based on both domestic conjuncture and commensurate with the global factor, reduces the risk that domestic inflation already embedded is further boosted by inflation imported via a Sterling depreciation.”
She’s open to a policy rate reversal in the medium term “when the domestic supports to demand fade and when weakness in external sources of demand bite.”
She said, “the domestic conjunctural situation is characterized by very high inflation and various supports to consumer purchasing power relative to real income”. The support factors include “two fiscal packages, strong employment, wide-spread bonuses as well as robust wage growth, strong housing values, accumulated savings, quality trade-down, and borrowing through credit cards among other schemes.”
Globally, tightening by Fed and ECB suggests depreciation pressure on Sterling that could “add to inflation particularly in the near term”.
Full speech here.