Rate cuts should be a way off says Bank of England member Greene

Bank of England policymaker Megan Greene emphasized that interest rate cuts in Britain should stay a distance away due to the enduring inflation pressure, which poses a greater threat compared to the United States.

Greene argued that markets were mistaken in anticipating that the British central bank would initiate rate cuts earlier and in greater magnitude than the Federal Reserve this year. She contended that a delayed commencement of policy easing would be more advisable.

"In my view, rate cuts in the UK should still be a way off as well," Greene penned in a column featured in the Financial Times.

Greene's comments stood in contrast to recent statements made by BoE Governor Andrew Bailey, who has openly discussed the possibility of rate cuts this year, deeming expectations for such actions as "not unreasonable."

Jonathan Haskel, known as one of the Monetary Policy Committee's most hawkish members, has stated that rate cuts should be far from imminent.

The MPC's next policy decision is scheduled for May 9th.

"Following surprisingly strong U.S. March CPI inflation, markets now expect the Bank of England will cut rates earlier and by more than the Federal Reserve this year," Greene said.

"The markets are moving rate cut bets in the wrong direction," Greene, an American economist who joined the MPC last July, further commented. In the article titled "Markets must stop comparing the UK and the U.S.," Greene emphasized that the enduring inflation poses a more significant threat to Britain than to the U.S.

Money markets anticipate approximately 45 basis points of interest rate reductions by the BoE this year, with the first rate cut fully priced in for August.

Investors have priced in more than the 42 basis points of U.S. rate cuts, with expectations slightly tempered after hotter-than-expected U.S. inflation data on Wednesday.

Greene pointed out that the contrast in labor supply between the two nations is striking, and British services inflation continues to outpace that of the United States.

In February, British annual consumer price inflation decelerated to 3.4%, and it is anticipated to dip below the BoE's 2% target in the April-June period before experiencing a slight uptick once more.

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