BoE’s Greene: Warns of second-round inflation effects if we act late
The comments from Bank of England (BoE) Monetary Policy Committee (MPC) member Megan Greene released during the Asian trade on Tuesday signals that she is worried about second-round inflation effects coming into play if we [central bank] fail to act soon.
Megan Greene, a member of the Bank of England's Monetary Policy Committee, has expressed concerns about the potential second-round inflation effects if the central bank delays its actions. According to Greene, if the bank waits until these effects materialize, it will be too late. However, Greene believes the greater risk is not being proactive enough in tackling inflation, rather than raising rates too soon.
The latest forecasts from the International Monetary Fund do not surprise Greene and suggests that the UK's monetary policy is not overly restrictive. The British Pound (GBP) has shown no immediate reaction to Greene's remarks, currently trading around 1.3220 against the US Dollar. Greene's speech, scored at 8.2/10 on the FXS Speechtracker, indicates a more hawkish stance compared to her previous speeches.
This signals a readiness to raise interest rates sooner rather than later, which may support a firmer GBP outlook. Greene's warning emphasizes the importance of taking prompt action to prevent second-round inflation effects, suggesting the Bank of England may lean towards additional rate hikes if inflation pressures persist.
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