Data published yesterday confirmed that headline inflation in the UK continues to rise, but the rate of increase may be slowing.

The consumer price index rose by 9.1% year-on-year in May, following a rise of 9% in April.

In her speech earlier this week MPC member Catherine Mann argued that every one percent rise in U.S. interest rates will see the pound devalued by 4.5% over a two-year period, and add 0.5% to UK inflation.

Given that the Federal Reserve is committed to continuing to hike rates in ever larger increments, the Bank may need to keep pace unless it decides that any support for the pound would be futile given the still painful memories of 1992.

In what looks like becoming an ongoing discussion, the Bank of England’s Chief Economist disputed Mann’s claim, commenting that raising interest rates at a faster rate wouldn’t help Sterling.

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