Bank of England's Megan Greene: Acting Now on Inflation Can Minimize Policy Mistakes

Bank of England Monetary Policy Committee member Megan Greene said on Saturday that acting proactively on inflation now, rather than being overly cautious and risking severe second-round effects, would help minimize the downside of policy mistakes. According to Sina Finance, Greene said at a Centre for European Reform conference that when the path of inflation is uncertain, policymakers should consider how to minimize the harm caused by decision errors. At the Bank of England's November meeting, Greene was among the MPC majority who voted to raise borrowing costs from 3.75% to 4%; she had previously been among a minority calling for earlier rate hikes. She reiterated that, given uncertainty about the inflation outlook, the risk of raising rates too much and then cutting them if second-round effects do not emerge was much smaller than the risk of waiting too long to tighten and allowing inflation to get out of control. Greene said inflation had remained above target for about five and a half years, and failing to bring it under control now would be a greater risk and a more serious policy mistake.