BoE’s Greene considers proactive tightening of monetary policy appropriate

The risk of wage growth remaining elevated and firms passing on those costs warranted action to "proactively tighten ‌our monetary policy stance", Megan Greene, a member of the Bank of England's (BoE) Monetary Policy Committee (MPC), said on Wednesday.

Selected remarks

It is appropriate to proactively tighten our monetary policy stance to lean against the risk of wage growth getting stuck at higher levels. 

Data shows wage growth in the UK is too high. 

There is less labour market slack than thought.

It's appropriate to proactively tighten monetary policy.

GBP/USD trades lower

GBP/USD stands at around 1.3275 at the time of writing, down 0.51%.

Greene signals proactive BoE tightening amid rising UK wage risks

UK wage growth remains “too high”, while labour market slack is “less than thought”, according to BoE’s Greene, highlighting the risk of inflationary pressures becoming entrenched. Her markedly more hawkish remarks registered 9.4/10 on the FXS Speechtracker, against a historical average of 7.7/10, signalling a clear move towards tighter policy.

For GBP, the prospect of interest rates staying higher for longer or rising further offers support, as markets expect the BoE to act more forcefully against persistent domestic inflation risks. Greene’s call to “proactively tighten” the monetary policy stance, aimed at preventing wage growth from remaining elevated, underlines that pre-emptive, hawkish approach.