MNI BRIEF: Output Gap Shut, Wage Growth Too Fast - BOE Greene
MNI (LONDON) - Bank of England Monetary Policy Committee member Megan Greene cited persisent inflation pressures at an FT event, saying that wage growth, although slowing, has not come down "as quickly as I would have liked" and that the output gap, the difference between actual and potential growth, was "roughly closed."
Greene said that while inflation has fallen back a long way from its peak it has not been an even decline and services inflation, underpinned by the strong wage growth, "has remained stubbornly high."
She cited an upside inflation risk from the rise in the UK minimum wage, the National Living Wage, and cited the uncertainty arising from US trade policy, saying that "we can't even work out which direction tariffs would push inflation."
Greene backed the Bank's most recent rate cut she has consistently opposed any rapid easing, favouring gradualism. (see MNI POLICY: BOE Braces For Trump Impact Without Scenarios)