Posted November 16, 2023 at 12:11 pm.
LONDON, November 16 (TASR) – Bank of England (BoE) monetary policy committee member Megan Greene said on Thursday that investors have not yet grasped that the central bank’s interest rates may have to remain at restrictive levels for some time.
Structural changes in recent years in the world’s largest economies call for rate hikes, said Megan Greene.
“I think the global markets haven’t woken up to that fact yet,” she told Bloomberg Television.
The US economist is one of the few members of the BoE’s board of governors to vote for another rate hike during the central bank’s last two meetings, while the majority voted for “pause”.
How long interest rates in Britain need to remain restrictive will depend on the data, she said.
“There is reason to believe that the economy may be structurally a little bit different. That suggests we may have to stay restrictive longer,” said Megan Greene.
UK financial markets show that the 25 basis point cut in the discount rate is almost fully factored in by mid-2024, with two more likely to follow by the end of next year.
The BoE was not considering a rate cut, added Megan Greene.
This week’s data on inflation and employment are “good news” from the central bank’s point of view, she said, citing a slowdown in services inflation and weaker wage growth.
“This is good news, but I think there is still cause for concern about continued inflation in the UK.”
Asked how she might vote at next month’s monetary policy statement on December 14, she said she wanted to see economic data expected by then. (Reporting by David Milliken, writing by Andy Bruce, French version by Corentin Chappron, editing by Kate Entringer)
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