Key facts
- Bank of England MPC member Megan Greene said relying on high bond yields to control inflation is 'dangerous'.
- Greene stated that central banks need to 'put your money where your mouth is' through rate hikes.
- She voted for a quarter-point rate increase in June, July, and September.
- Markets anticipate a majority of the MPC will support a rate hike to 4% in early November.
Bank of England Monetary Policy Committee member Megan Greene warned on Thursday that it is "dangerous" for the central bank to rely on high bond yields to control inflation. Speaking at a conference in Cape Town, Greene stated that central banks need to actively implement interest rate hikes rather than passively assume market forces will manage inflation.
Greene, known as one of the more hawkish voices on the MPC, has previously voted for a quarter-point interest rate increase in June, July, and September. Financial markets are anticipating that a majority of the MPC will support raising the key interest rate to 4% at their upcoming meeting in early November.
BoE Governor Andrew Bailey has suggested that a significant increase in market borrowing costs and mortgage rates, partly influenced by the U.S.-Iran war, has provided the BoE with time to evaluate the necessity of further interest rate hikes in response to elevated energy prices.