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BoE MPC member warns bond markets cannot keep tightening forever

Megan Greene cited early indications of UK pay settlements rising about 3.5% next year, leaving limited wage disinflation toward the BoE’s 2% target.

Reported · Written up by our desk · Central Banks

Bank of England Monetary Policy Committee member Megan Greene warned that it would be “quite dangerous” to assume higher borrowing costs in bond and mortgage markets can keep doing the work of Bank Rate tightening indefinitely, according to commentary published by Action Forex.

Greene argued that policymakers eventually need to take direct action rather than rely on market moves, contrasting her view with BoE Governor Andrew Bailey’s stance that increases in gilt yields and mortgage rates since the US-Iran war have bought the central bank time to judge whether another Bank Rate rise is needed.

She linked the debate to the wage outlook, saying early indications point to UK pay settlements rising around 3.5% next year, which she said implies “not a whole lot of wage disinflation” and keeps the pace uncomfortable for returning inflation sustainably to the BoE’s 2% target.

Greene’s position aligns with her recent voting record, with her backing a 25 basis point increase to 4% in June, July and September, keeping her on the more hawkish side of the MPC discussion.

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