LONDON, March 25 - Megan Greene, a member of the Bank of England's Monetary Policy Committee, said on Wednesday she was not close to voting for an interest rate increase at this month's meeting, an assembly she described as being largely shaped by concerns over the economic fallout from the conflict in the Middle East.
"I wasn't tempted to hike," Greene told attendees at a discussion organised by U.S. investment bank Jefferies. Her comment came after last week's MPC decision in which members voted unanimously to keep the Bank's policy rate on hold. The committee also said it remained "ready to act" to ensure inflation heads back toward its 2% target as the economy absorbs the effects of the U.S.-Israeli war with Iran.
Greene's remarks followed the meeting, where some colleagues signalled that a rate increase could become necessary. In her post-meeting commentary, she warned that the risk of inflation persistence had risen "perhaps significantly" and suggested that British households might now be more sensitive to inflation shocks than before.
Those concerns were underscored on Tuesday when a survey from U.S. bank Citi showed a sharp rise in public inflation expectations for the coming year. The survey indicated expectations jumped to 5.4% in March from 3.3% in February - the largest one-month increase in more than 20 years.
Greene said the jump in inflation expectations elevated the risks to the BoE's price stability objective, but she cautioned it was not a certainty that this would generate undesirably large wage increases. Her reasoning reflected the view that the current labour market is weaker than it was during the last significant surge in inflation in 2022.
Greene has a record of dissent on recent easing moves; she voted against the Bank's last two rate cuts, in December and August of the previous year, and has previously voiced concern about the persistence of Britain's inflation rate above target.
Market pricing on Wednesday showed investors were anticipating at least two quarter-point increases in Bank Rate by the MPC's late-July meeting. That expectation was lower than pricing earlier in the week, when markets had been pricing four hikes over the course of 2026, but it represented a marked shift from the two cuts that were anticipated before the outbreak of the war.
Context and scope - Greene framed her stance around the immediate economic effects of geopolitical developments and the recent rise in household inflation expectations. She stressed uncertainty about the transmission of expectations into wages given the current state of the labour market.