- I expect slack to increase
- It’s encouraging that services inflation is coming down
- Evidence on wage growth is also encouraging
- BoE projection is benign
- Inflation has stabilised
- My concern is around second-round effects
- Business inflation expectations are elevated and rising
- Preliminary results from BoE agents’ survey point to pay settlements of around 3.5%, maybe due to upward shift in wage-setting
- Policy must bear down if expectations are elevated
- There are some green shoots emerging in the labour market
- Vacancies have stabilised and consumption is weak
- The most salient global risk comes from markets
- When talking about the big weighting of AI on the stock market, she said that a correction could spill over (negatively affect the whole economy)
- Most policy rules suggest keeping rates steady
- I worry that wage and price-setting have changed a bit
- Budget energy price measures appear to be a one-off, but may help inflation expectations
These are some fairly dovish comments from Greene who has been one of the most hawkish BoE members for quite some time. Her concern remains the second-round effects around inflation but it feels like she toned down a bit her “hawkishness”.
The BoE is widely expected to deliver a 25 bps rate cut in December with a total of 64 bps of easing seen by the end of 2026.
This article was written by Giuseppe Dellamotta at investinglive.com.