Bank of England’s Mann notes slight increase in economic activity since last MPC meeting

Catherine Mann, one of the Bank of England’s most vocally hawkish policymakers, has noted that economic activity has increased slightly since the Monetary Policy Committee’s last gathering. The comment lands at a sensitive moment for UK monetary policy, with the next rate decision looming on September 17 and the committee already split on where borrowing costs should go.

For context, Mann was one of three MPC members who voted to raise rates at the July 30 meeting. The majority held firm, voting 6-3 to keep the Bank Rate at 3.75%. Mann and two colleagues wanted to push it to 4%, a quarter-point hike driven by concerns about inflation that refuses to fully cooperate.

A hawk who keeps circling

Mann has been the MPC’s most reliable inflation hawk since joining in 2021. Her concern at the July meeting centered on energy-price volatility tied to geopolitical tensions in the Middle East. In her view, these supply-side shocks create a feedback loop: energy costs push up input prices, businesses pass them along, and inflation expectations start drifting upward.

The UK’s uneven recovery

GDP growth came in at an estimated 0.1% for the second quarter of 2026. Public-sector output has climbed roughly 4.5% since late 2023, a meaningful expansion driven by government spending. The private sector, meanwhile, has been considerably more subdued.

If the government is pumping demand into the economy through spending while the private sector stays flat, the Bank of England faces a situation where tightening policy could disproportionately squeeze businesses that are already struggling. But leaving rates unchanged risks letting inflation embed itself in an economy that’s receiving a steady fiscal boost.

What the September meeting could look like

The 6-3 split in July tells us the MPC is not of one mind. Three members already wanted to hike. On the other hand, 0.1% GDP growth is the kind of number that gives rate-hike advocates pause. The risk is that you tip the economy into contraction without meaningfully denting inflation if the price pressures are supply-driven rather than demand-driven.

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