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Bank of England's Greene wants more evidence for rate cut - REUTERS

FEBRUARY 22, 2024

Feb 22 (Reuters) - Bank of England policymaker Megan Greene said on Thursday she wanted more evidence that inflation pressures were easing before voting to cut rates, after dropping her call for higher rates at the start of this month.

"Markets are pressuring every central bank to cut rates. I would need to wait to see more evidence that inflation wasn't as entrenched as we may fear before I would be willing to vote (for a cut)," she said at an event hosted in Johannesburg by risk advisors Kroll, where she was previously chief economist.
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Greene stuck fairly close to previous comments in her remarks, which echoed the line from Governor Andrew Bailey who said this month that it was too early to cut rates while services price inflation and wage growth remained high.

Inflation was 4% in December and January and the BoE expects it to fall to its 2% target in the second quarter of this year, due to lower energy prices, before rising back towards 3% as the effect of the lower energy prices fades.

Greene said she no longer thought rate rises were necessary because of downside surprises to the labour market and falling services price inflation.

"That was encouraging news that was enough to make me feel like maybe we should just hold on and wait," she said.

Last week official data showed Britain had slipped into a mild recession in the second half of 2023, although more forward-looking business surveys such as the purchasing managers' index have been more upbeat since the start of the year, which Greene welcomed on Thursday.

"The PMI was more in contractionary territory. It seems to have ticked up and that provides some (news) on where the economy is going for this year," Greene said. 

On Wednesday, BoE policymaker Swati Dhingra urged fellow Monetary Policy Committee members to join her in voting for a rate cut to avoid damaging growth, arguing that weak producer price data offered a better guide to future inflation than services prices or wages. Advertisement · Scroll to continueReport this ad

Reporting by David Milliken; editing by Sarah Young and Kate Holton


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