--- title: "Financial conditions: what’s priced in? − speech by Catherine L. Mann" description: Mann uses a financial-conditions lens to argue the UK monetary stance is too loose and that the MPC cannot lean on risk premia to do the tightening for it. source: Helious canonical: "https://helious.io/news/643d677b77b67b25945677c7bacd6153/financial-conditions-whats-priced-in-speech-by-catherine-l" --- BOE 01 Oct 2026, 12:00 UTC # Financial conditions: what’s priced in? − speech by Catherine L. Mann ## SPEECH DIGEST HAWKISH high confidence · 29.3k characters read Mann uses a financial-conditions lens to argue the UK monetary stance is too loose and that the MPC cannot lean on risk premia to do the tightening for it. She discloses that she voted for a 25bp Bank Rate INCREASE at each of the last two meetings and warns against letting policy expectations drift down. She frames the widened OIS-versus-MaPS gap, a positive and internationally unusual UK short-end term premium, and sharply positive SONIA skew as evidence of an inflation and policy-uncertainty premium that does not tighten real conditions. The piece reads as a hawkish case for higher Bank Rate, transmitted through a communication critique of the March hold. **What’s new: **The genuinely new item is the vote disclosure: a sitting MPC member on record as having voted for 25bp increases at the last two meetings, plus an explicit call for Bank Rate rises to follow through rather than relying on the nominal curve. The supporting analysis (widened OIS-MaPS gap, positive UK short-end term premium, positive SONIA skew, the March uncertainty spike) largely documents what is already in the price and reinforces the prevailing hawkish narrative rather than surprising it. The September forecast of inflation above 4% in Q1 2027 is a firming of the risk framing, not a new number for most desks. ### KEY FINDINGS - Mann states she voted for a 25 basis point increase in Bank Rate at the last two meetings and judges the current stance not sufficiently tight. A dissenter voting directly for hikes anchors the hawkish tail of the MPC and argues the front end should reprice higher, not merely stay on hold. - She argues the MPC cannot rely on the nominal yield curve's upward shift for restrictiveness and must eventually "follow-through with Bank Rate rises". This is a call to convert market-implied tightening into actual hikes, which supports higher front-end sterling rates and a flatter curve. - The OIS curve implies over 100 basis points of tightening over the coming 12 months versus a hold-and-cut path in MaPS, with the gap widening since the survey closed. Market pricing sits far ahead of survey medians, so the front end is carrying a large policy-risk premium that can unwind if communication clarifies the reaction function. - The UK short-end term premium has turned positive and is an outlier internationally, and SONIA skewness has turned sharply positive. Investors are demanding compensation for UK policy-rate uncertainty skewed to the upside, which mechanically raises yields without doing the real tightening Mann wants. - The unanimous March hold is identified as having increased monetary policy uncertainty, which the SVAR evidence links to a rise in the 1-year OIS rate and tighter financial conditions. Wrong-footed communication is itself a tightening impulse, so clearer signalling could loosen conditions and pull the front end lower. - The Bank's September near-term forecast projects inflation rising above 4% in Q1 2027, ahead of spring wage negotiations. An above-4% projection strengthens the case for pre-emptive hikes and keeps inflation-risk-premium pressure on the curve. ### FROM THE DOCUMENT In my view, our current monetary policy stance is not sufficiently tight, which is why I voted in the last two meetings for a 25 basis point increase in Bank Rate. At some point, we need to follow-through with Bank Rate rises – to maintain credibility, and to avoid policy expectations repricing downwards and inflation expectations repricing further upwards. In my view, real financial conditions are insufficiently tight. Furthermore, the skewness of SONIA has turned sharply positive following the outbreak of the conflict in the Middle East, which implies that upside risks to interest rates are perceived to be materially larger than downside risks. Given at the Nomura London Macro Forum The conflict in the Middle East has generated significant volatility and financial market repricing in the UK, relating to uncertainty around the evolution of the conflict, the outlook for UK inflation, and our monetary policy response. Financial conditions are an essential mechanism through which monetary policy transmits and therefore form an important input into my monetary policy decisions. In this speech, I will evaluate the information that financial conditions provide about the current monetary policy stance and transmission, and carefully examine what they reveal about the types of risks driving recent moves. Let me start with a headline indicator of financial conditions, which summarizes how a broad range of asset price movements contribute to changes in nominal and real financial conditions. 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