Catherine Mann, a policymaker at the Bank of England, said she "can wait" to raise interest rates while warning that a global supply chain issue is giving UK companies greater pricing power, a potentially inflationary influence.
"There's a lot of endogenous tightening of financial conditions already in play in the UK," Mann said in a webcast on Thursday. "This means I can postpone active tightening until the bank rate rises."
However, the former Citigroup top economist indicated that the impact of Brexit, as well as supply disruptions, could mean corporations can pass on price hikes to customers.
Her words signal that, while she may not vote to raise rates this year, she recognizes that policy tightening is on the horizon. The pound and UK government bonds were scarcely altered as a result of her statements.
Money markets have priced in the BoE's first rate hike by the end of this year, speculation that Governor Andrew Bailey and his colleagues have allowed to run for weeks.
"Financial markets are doing their homework." "They regard monetary policy normalization as the direction of travel," Mann, who joined the monetary policy committee as an external member in September, said.
"My concern is that the global and border dynamics, in terms of UK prices, would raise local enterprises' pricing power comparatively more in the UK than in... the US and the Eurozone," she said.