Second half of 2023 is a temporary soft patch

Bank of England (BoE) policymaker and Monetary Policy Committee (MPC) member Catharine L Mann hit newswires on Thursday while discussing her policy outlook at an economic policy conference at the Annual National Association for Business Economics.

Key highlights

• Latest Gross Domestic Product (GDP) data confirms that the second half of 2023 was a soft patch.
• The BoE needs at least one more inflation data print before deciding next moves.
• UK unemployment rate remains “pretty low”, labor market continues to be tight.
• Wage growth is slowing, but the pace remains “challenging” for the BoE’s Consumer Price Index (CPI) target.
• GDP data is a rear-view mirror, Purchasing Managers’ Index (PMI) and other forward-looking data all look good.
• Goods inflation has slowed across all advanced economies.
• Decomposition sources of inflation will be important in policy decisions.
• Goods prices may be deflationary at some point in the UK, but not on a durable basis.
• The UK has much stickier services inflation than the EU or the US.