Travel News

BY Holly Williams

Bank of England interest rate-setter Megan Greene has cautioned that recent rises in inflation could prove longer-lasting than forecast, leaving policymakers in an “uncomfortable place”.

In a speech at the National Institute of Economic and Social Research (Niesr), Bank Monetary Policy Committee (MPC) member Ms Greene said that stubborn inflation of around 3.5% for the rest of the year could keep fuelling wage rises and price hikes in the UK.

She said food prices have “surprised consistently to the upside”, adding that the Israel-Iran conflict could also push up inflation by putting pressure on oil prices.

“I worry about the near-term profile for inflation this year, which in my view now resembles more of a ‘plateau’ than a ‘hump’,” she said.

Ms Greene said underlying activity in the economy was also “weak” and raised concerns that the consumer spending would remain under pressure as many borrowers roll off fixed rates onto deals with higher rates, while the jobs market was cooling.

She said: “I continue to think the risks remain two-sided but skewed to the downside on growth and to the upside on inflation.

“This is an uncomfortable place to be for a central banker.”

Ms Greene was one of a majority of MPC members who voted last week to keep rates on hold at 4.25%.

In a split vote, six members opted to hold and three preferred to cut.

Ms Greene echoed comments at the time of the decision, saying in her speech that given wider uncertainty and escalating Middle East conflict, “a careful and gradual approach to removing monetary policy restrictiveness continues to be warranted”.

The Bank was seen at the time of last week’s decision to be leaving the door open to a cut in August, when it will have its next set of quarterly forecasts to hand.

Ms Greene said: “On the global front, there are a number of key events playing out between now and our next meeting, including the deadline for the pause on so-called ‘reciprocal tariffs’ from the US, the potential passage of a budget in the US and the unfolding of events in the Middle East.

“It’s unlikely that the uncertainty from these events – and subsequent developments – will be resolved any time soon.”