Bank of England rate-setter Catherine L. Mann said the rise in U.K. market borrowing costs after the outbreak of war in Iran should not reassure policymakers that inflation is being contained. She said higher nominal rates appear to reflect expectations of stronger inflation and an uncertainty premium tied partly to the Bank's own communications, rather than sufficiently restrictive real financial conditions. Mann said the Bank's March decision to hold rates was received by investors as a passive stance, while the subsequent decision not to publish a baseline forecast added uncertainty about its policy intentions. She voted last month to raise Bank Rate to 4% from 3.75%, while the majority held rates unchanged. Her position conflicts with Governor Andrew Bailey and other Monetary Policy Committee members who have said higher market borrowing costs gave the Bank more time to decide whether to raise rates. U.K. annual inflation had risen to 3.1% in August from 2.9% in July, above the Bank's 2% target.