Warning from Bank of England official: Policymakers must not wait for a second wave to curb inflation

Source link: Warning from Bank of England official: Policymakers must not wait for a second wave to curb inflation. Megan Green, a member of the Bank of England's Monetary Policy Committee, said the country's monetary policy is not very restrictive. She warned that if the central bank waits to see the effects of a second inflation wave, it will be too late to act. Markets have priced in a greater likelihood of an interest rate hike at the November meeting; fresh wage data and […] Source site: Safir Arjan

At a glance, Megan Green, a member of the Bank of England's monetary policy committee, said that the country's monetary policy is not very contractionary. Blackrock's new turn in the American market; Reduction of stocks and increase of treasury bonds at a glance Blackrock reduced the weight of American stocks from "overweight" to "neutral" and short-term treasury bonds to a fall of more than 6% in the South Korean stock market; Concerns about oil and shares of chip makers shook the Asian market. At a glance, South Korea's Caspian Index fell by more than 6% and reached below 6,000 units. Will the lowest Saudi gas line become a new route for oil transportation? At a glance, Saudi Arabia is considering increasing the oil export capacity from the pipeline route to 10 million barrels in the minutes of the new meeting of the Central Bank of Australia, paving the way for another increase in interest rates. put under pressure Investors, get informed about the news by subscribing to The Times newsletter.

Bank of England policymaker Megan Green said the country's monetary policy is not too restrictive and warned that if the central bank waits for the effects of the second wave of inflation to emerge, it will be too late to react.

Green, an outside member of the central bank's monetary policy committee, said in his view the bigger risk is not that interest rates will rise prematurely; Rather, it is that the central bank does not act proactively enough to deal with inflation. Second-wave effects occur when an initial price shock, such as an increase in the cost of energy, spreads to wages and prices more broadly, making inflation more persistent.

These comments reinforce Green's position as a contractionary member of the committee. In the July and September meetings of the central bank, he had voted to increase the interest rate by a quarter of a percentage point; But in both meetings, he was among the three members who stood against the majority who wanted the rates to remain unchanged.

Green has made similar arguments in recent days. He said last week that he expected some second wave effects to emerge in the current UK inflationary cycle. He also warned that wage growth of around 3.5 percent next year will be worrying; Because price increases may lead to wage settlements and lead companies to raise prices again.

He said he was not surprised by the latest IMF forecasts for the UK. The International Monetary Fund this week raised its forecast for UK economic growth in 2026 to 1.3%, citing more investment related to artificial intelligence as one of the reasons. However, the organization warned that the Middle East war and high energy prices have exposed the global outlook to significant risks.

Britain, like other major economies, is facing inflationary pressures from rising oil and diesel prices following the Iran-related conflict. Policymakers who want early action say that if those costs feed into wages and inflation expectations, containing them will require more painful contractionary policies in the future.

In recent weeks, markets have priced in the possibility of an interest rate hike at the Bank of England's November meeting. Recent reports have estimated this probability to be around 84%. Green's comments indicate he will continue to advocate for tighter monetary policy. The next UK wage and inflation data will determine whether his view finds wider support in the committee.