Catherin Mann, speaking at the 53rd Annual Conference of the Money Macro and Finance Society 'Inflation Persistence and Monetary Policy Strategy' at the University of Kent:
- We cannot be complacent in the face of the short-term spikes and medium-term drift in inflation expectations
- Acting more forcefully now, to ensure that the drift does not become the norm, is designed to avoid depending on a deeper and longer contraction to return inflation to target
- Recognising the potential for a shift in the Phillips curve shows how acting sooner and more forcefully can short-circuit the embedding of inflation
- A fast and forceful tightening is superior followed by a pause or even a reversal is preferable to a gradual approach
- The more we control medium-term inflation expectations now, the less tight for long monetary policy will need to be
- Full text
Mann is a hawk so none if this is a surprise. This is also the kind of rhetoric that's increasingly embedded in the groupthink of central banks. They believe it's better to hike even in the face of a recession than to let inflation expectations become de-anchored.
/GBP