Bank of England policymaker Megan Greene has joined other hawkish voices within the central bank in warning against early interest rate cuts. Greene emphasized the higher risk of persistent inflation in the UK compared to the US and other countries. She stated that rate cuts in the UK 'should still be a way off' due to this inflation risk. The Monetary Policy Committee, of which Greene is a member, is currently considering when to lower interest rates from their highest level in 16 years.
This aligns with the market pricing, which indicates that rate cuts by the Bank of England are not expected until later in the year. Money markets are currently pricing in 56 basis points of interest rate reductions by the BoE in 2022, with a 52% probability assigned to the first cut occurring in June. However, Greene's comments highlight the significance of the persistence of inflation as a greater concern for Britain than for the US. She pointed out stark differences in labor supply between the two nations, noting that UK services inflation persists significantly higher than in the United States. Greene emphasized the necessity for wage growth to decelerate further to achieve sustainable levels of services inflation consistent with the target.
Megan Greene, a member of the Bank of England's Monetary Policy Committee, has stated that interest rates in the UK should stay higher for longer due to persistent underlying causes of inflation. Financial markets are betting on the first reduction in UK interest rates in August, but Greene believes rate cuts should still be a way off. She points out that the dynamics of the UK and US economies are different, with UK services inflation remaining higher than in the US. The next policy decision by the MPC is due on May 9th. [64191f13] [2def8acb] [1afc7fba] [67bffeba]