Bank of England's Mann says 'we're not there yet' on inflation expectations

LONDON (Reuters) -Bank of England interest rate-setter Catherine Mann said on Thursday that inflation expectations in Britain remain too high and interest rates should continue to bear down on price pressures.

"It is perhaps counterintuitive that in order to create an environment conducive to growth, monetary policy must remain restrictive for longer," Mann said in the text of a speech she was due to deliver at an event organised by the Resolution Foundation think tank.

"But this is necessary to bring inflation sustainably back to our 2% target in the medium term."

Mann said former Federal Reserve chair Alan Greenspan - who was her boss early in her career - had been clear that price stability occurred when households and businesses were not factoring expected price changes into their decisions.

"The evidence from consumer behaviour is that we are not there yet," she said.

Mann voted with a majority of the Monetary Policy Committee members last month to keep the BoE's benchmark Bank Rate unchanged. In August she was in a minority which opposed a cut to 4%.

Last week Mann said she thought Britain's inflation rate had become persistently high - although that did not mean further interest rate cuts were completely off the table.

(Reporting by David MillikenWriting by William Schomberg, editing by William James)