Global Market: BoE's Megan Greene says UK interest rates may not be restrictive enough

Bank of England policymaker Megan Greene said on Tuesday that the International Monetary Fund's upward revision to its forecast for British economic growth this year reinforced her view that monetary policy was not sufficiently restrictive, according to Reuters.

Greene, one of the few members of the Bank of England's Monetary Policy Committee (MPC) to vote for higher interest rates, reiterated that the risks of keeping borrowing costs unchanged for too long outweighed the potential costs of raising rates prematurely.

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Speaking at the Atlantic Council think tank on the sidelines of the IMF's annual meeting in Bangkok, Greene said the upward revision to the IMF's UK growth forecast aligned with her view that current monetary policy was not restraining economic activity enough, the report stated.

Her comments highlight the divide among policymakers over the appropriate level of interest rates as the central bank weighs inflation risks against the economic growth outlook.

Greene has argued that delaying further monetary tightening could allow inflationary pressures to persist, potentially requiring more aggressive action later. Her position contrasts with that of policymakers who favour a more cautious approach amid concerns about the impact of elevated borrowing costs on households and businesses.

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The IMF's improved growth outlook adds to the debate over whether the Bank of England needs to maintain a tighter monetary policy stance to ensure inflation returns sustainably to its target.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)