High inflation in Britain is not yet fully under control and is more likely to exceed the Bank of England's forecast shortfall in the medium term, Catherine Mann, one of the BoE's interest rate setters, said on Wednesday.
Mann was the only one to vote against the reduction in borrowing costs at a meeting of the BoE's Monetary Policy Committee last week, which decided by a ratio of 8-1 to lower the Bank Rate to 4.75% from 5%. He also opposed the initial rate cut in August.
Last week, the BoE revised up its inflation forecast due to a higher minimum wage and short-term fiscal stimulus in the new Labor government's first budget.
The BoE predicts inflation will rise from 1.7% in September to 2.5% by the end of the year and not return to the 2% target until mid-2027, a year later than previously thought.
Financial markets only expect the BoE to cut rates twice next year, compared to at least five quarter-point cuts they forecast for the European Central Bank as the eurozone economy slows.
Mann said service price inflation in Britain was still "quite difficult to come down," although there were early signs that hospitality businesses were finding it harder to raise prices or pay higher wages.
Energy prices are more likely to go up than down in the next few years, adding to the risk of higher inflation overall, he said.
