Bank of England policymaker Megan Greene has cautioned against over-reliance on high bond yields to control inflation. Speaking at a conference in Cape Town, Greene warned that assuming markets will handle inflation without direct intervention is risky. “It’s quite dangerous to just assume the markets will do your work for you … At some point, you need to put your money where your mouth is,” she stated.
Greene, a member of the Monetary Policy Committee (MPC), has consistently voted for a quarter-point interest rate hike to 4% in recent meetings. Financial markets anticipate that the majority of the MPC will support this rate increase at their next meeting in early November.
BoE Governor Andrew Bailey has suggested that rising market borrowing costs and mortgage rates following the US-Iran war have provided the central bank with more time to evaluate the need for rate adjustments in response to higher energy prices. However, Greene’s remarks underscore the importance of proactive monetary policy rather than passive reliance on market conditions.