BoE’s Greene Highlights Stalled Wage Disinflation and Elevated Inflation Risks

• BoE’s Greene warns UK wage disinflation stalled.
• Labor market stronger, risks second-round inflation effects.
• Monetary policy not restrictive enough.

Bank of England (BoE) Monetary Policy Committee member Megan Greene stated on Tuesday that UK wage disinflation has stalled, suggesting the labor market is stronger than officials had anticipated. Greene highlighted that current wage growth levels remain above those consistent with the BoE’s 2% inflation target, noting that 3% wage growth aligns with the target. She expressed concern that the current monetary policy stance may not be restrictive enough and that inflation expectations are anchored above norms. Greene emphasized the need for the BoE to proactively lean against second-round inflation effects, which she believes pose a greater risk than previously thought. Her remarks precede the release of UK inflation figures.