MNI BRIEF: BOE Greene - Case For Cautious Rate Cut Approach
MNI (LONDON) - Independent Bank of England Monetary Policy Committee member Megan Greene said that the neutral interest rate, 'r-star', has probably risen and that policy rates were unlikely to return to pre-pandemic levels,as she advocated a cautious approach to rate cuttting.
In a 'Fireside Chat' at the Atlantic Council Greene said that the MPC was looking closely at disinflation stemming from Chinese exports and the possibility that as a result of goods deflation, services inflation could run stronger and overall inflation could remain at target but overall she was wary of an aggressive rate cutting strategy.
Greene said that core goods prices have been really low, but there were doubts over whether Chinese goods deflation would persist. She also noted that swings in UK yield curves are heavily influenced by developments in US ones. The MPC is widely expected to cut in November, but it is an open question whether it will follow up with another cut in December.