Key facts
- Greene said the bigger policy mistake would be failing to get on top of inflation after about five-and-a-half years above target.
- Greene said she preferred raising rates too much and cutting later over waiting too long to tighten.
- Greene wrote earlier in the week that pay growth stuck at around 3.5% or higher was a risk to guard against.
- Financial markets are betting on a BoE hike in December and two or possibly three quarter-point moves in 2027.
- Chief Economist Huw Pill told the Financial Times rates would likely need to rise further in 2027.
Bank of England policymaker Megan Greene said on November 14 that acting proactively to control inflation was preferable to a cautious approach that risked second-round effects, speaking at a conference held by the Centre for European Reform in London.
Greene was among the majority of Monetary Policy Committee members who voted at the BoE's November meeting to raise borrowing costs to 4% from 3.75%, and had previously been part of a minority calling for an earlier rate hike. She restated her view that, given uncertainty about the inflation outlook, it was less risky for the BoE to raise rates too much and then cut them if second-round effects did not materialise, than to wait too long and risk letting inflation get out of hand.
"When you have no idea where inflation is going, when you're facing uncertainty, I think you need to adopt an attitude of how can I screw this up the least?" Greene told the conference. She said the risk of not getting on top of inflation after a period of about five-and-a-half years above target was the bigger policy mistake.
Greene wrote earlier in the week that it was appropriate for the BoE to proactively tighten monetary policy to guard against the risk of pay growth getting stuck at around 3.5% or higher and firms passing the costs on through higher inflation.
Financial markets are betting on the BoE hiking interest rates again in December and following that with two or possibly three more quarter-point moves in 2027. BoE Chief Economist Huw Pill told the Financial Times in an interview published on November 14 that it was likely there would be a need to raise rates further in 2027, over and above an increase at the next meeting in December.