Bank of England policymaker Megan Greene argues the central bank should proactively tighten policy. She points to a labour market with less slack than expected and to wage growth that could settle above a level consistent with 2% inflation.
Bank of England policymaker Megan Greene said on Wednesday that it is appropriate to tighten policy proactively. Her aim is to guard against wage growth getting stuck at higher levels and firms passing those costs on.
Writing in the Financial Times, Greene said forward-looking measures suggest pay growth is likely to stabilise at or above 3.5% over the coming year. That sits above the level consistent with keeping inflation around 2%.
Her reading of the jobs market and wage dynamics points to less slack than policymakers had thought. As a result, she wrote, the risk of wage growth getting stuck at higher levels and of firms passing those costs through is greater.
According to the Financial Times piece, Greene wrote that it is appropriate to "proactively tighten our monetary policy stance to lean against this."
Source: Investing.com (Reuters)
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