Bank of England’s Catherine Mann Sees Stronger UK Growth, Keeps Rate-Hike Risks in Focus
Bank of England’s Catherine Mann Sees Stronger UK Growth, Keeps Rate-Hike Risks in Focus
LONDON, September 1, 2026. Signs of firmer economic activity are emerging in the UK just as inflation continues to complicate the Bank of England’s path on interest rates.
Catherine Mann, a member of the Bank’s Monetary Policy Committee, said the labour market has stabilised and inflation has been slightly stronger than expected since the central bank’s last policy meeting.
Her assessment comes after a divided July decision, when three policymakers argued that interest rates should be higher.
Bank Rate was left at 3.75%, with the MPC voting 6–3 to hold it there. Mann, Megan Greene, and Huw Pill voted for a 25-basis-point increase to 4%.
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UK economy shows mixed signs
The latest assessment comes against economic data pointing in different directions.
Mortgage approvals fell to 56,053 in July, their lowest level since January 2024. At the same time, net unsecured consumer borrowing rose by £2.006 billion, suggesting demand for consumer credit remained relatively firm.
The contrast highlights the difficulty facing policymakers.
Higher borrowing costs are still weighing on the housing market, but the wider economy has not shown a broad deterioration that would automatically make lower interest rates the obvious next step.
The stabilisation in the labour market adds to that picture. If employment conditions stop deteriorating, household incomes and spending can remain more resilient than previously expected.
Inflation remains above target
The Bank of England has a 2% inflation target, but price growth remains above it.
At its July meeting, the Bank said inflation had fallen to 2.6%, but expected it to rise again later in the year, partly because of higher energy prices.
Mann said inflation had been slightly stronger than expected since that meeting, reinforcing concerns that the decline in price pressures may not be completely smooth.
For policymakers, the timing of any interest-rate move matters because monetary policy works with a lag.
Cutting rates too quickly could support demand before inflation is firmly under control. Keeping rates restrictive for too long, however, could weaken economic activity unnecessarily.
The September decision is still open
The next Bank of England interest-rate decision is scheduled for September 17.
Bank Rate remains at 3.75%, following July’s 6–3 vote.
Financial markets were pricing only around a 15% probability of a September rate increase as of Tuesday, while still anticipating the possibility of a hike later in 2026.
That means the latest comments should not be interpreted as confirmation of a September increase.
Instead, the focus will remain on incoming inflation, employment and economic-activity data.
A further improvement in growth alongside persistent inflation would make it harder for the Bank to justify rapid easing. A sharper slowdown in demand would strengthen the argument for keeping rates unchanged or eventually cutting them.
Why the outlook matters for markets
The direction of UK interest rates has consequences well beyond the Bank of England.
Expectations of higher rates can support sterling by increasing the potential return on pound-denominated assets. They can also put upward pressure on government bond yields as investors adjust their expectations for future borrowing costs.
For households and companies, the effect is more direct. A prolonged period of restrictive policy can keep mortgages and other forms of borrowing expensive.
economic picture therefore remains finely balanced.
The UK is showing signs that some weakness may be easing, but inflation has not yet returned to the Bank’s target. That leaves policymakers with little room to assume that the next move in rates will be straightforward.
The September meeting will provide the next important test of whether improving economic conditions are strong enough to alter the Bank’s assessment or whether inflation continues to demand a cautious approach to monetary policy.
Source: Bank of England
