Megan Green, a member of the Monetary Policy Committee at the Bank of England (BOE), stated that wage and inflation indicators are heading in the right direction, but they remain at extremely high levels. She noted that the persistence of inflation still poses a challenge, despite some improvements in the data.
Green confirmed that medium-term inflation expectations have begun to rise, raising concerns about price stability in the United Kingdom. Although the process of inflation slowing continues, some indicators suggest a slowdown in the labor market, which adds further pressure on the British economy.
The Bank of England member also pointed out that the risks related to UK productivity tend to lean towards the negative, increasing economic challenges. She indicated that currency exchange rates could be a disinflationary factor if the current trend persists, which she considers a positive development amid global market volatility.
Regarding trade policies, the Bank of England member explained that she sees tariffs as a potential factor for reducing inflation in the UK, which impacted her recent decision on interest rates. She added that she was very hesitant about her recent decision to cut rates and will not change her position even after recent news about the relations between the United States and China.
She also mentioned a significant degree of uncertainty regarding tariffs with the European Union, making it a key factor affecting domestic demand. She concluded her remarks by emphasizing that the Bank of England is placing greater focus on domestic economic factors compared to external trade developments, reflecting a more cautious approach in facing current challenges.
