Bank of England Monetary Policy Committee external member Megan Greene argued that stronger-than-expected UK economic growth reinforced her view that monetary policy was not sufficiently restrictive to contain inflation. Speaking at an Atlantic Council event on the sidelines of the IMF meetings in Bangkok, Greene pointed to the IMF’s upgrade of its 2026 UK growth forecast from 1.0% to 1.3% as evidence supporting her position. “I’m not surprised that our GDP forecast has been revised upwards by the IMF,” she said. “To my mind, this reflects the level of restrictiveness of the stance of monetary policy, where I just don’t think we’re that restrictive.”
Greene also cited the resilience of the UK labour market as evidence that economic activity was holding up despite higher borrowing costs. The IMF forecasts UK inflation averaging 3.3% in 2026 and 2.8% in 2027, both above the BoE’s 2% target. For Greene, stronger growth and persistent inflation suggest that the current 3.75% Bank Rate is not providing sufficient restraint. Her argument is that economic resilience leaves room for further tightening, rather than demonstrating that existing policy is already restrictive enough.
Greene, who has voted for higher interest rates at BoE meetings since June, also reiterated her warning against relying on financial-market tightening to substitute for monetary policy action. Higher market borrowing costs cannot indefinitely do the work of Bank Rate, in her assessment. Her comments reinforce her preference for additional tightening, with the IMF’s growth upgrade providing further support for her argument that the UK economy can withstand higher interest rates while inflation is brought back toward target.
Key Takeaways
- BoE’s Greene sees monetary policy as insufficiently restrictive: MPC external member Megan Greene argued that the current 3.75% Bank Rate is not doing enough to contain inflation.
- IMF growth upgrade reinforces her hawkish stance: The IMF raised its 2026 UK growth forecast from 1.0% to 1.3%, which Greene interprets as evidence that higher interest rates have not restrained economic activity sufficiently.
- Inflation remains above target: IMF forecasts UK inflation averaging 3.3% in 2026 and 2.8% in 2027, supporting Greene’s concerns about persistent price pressures.
- Resilient employment supports the case for tightening: Greene sees continued labour-market strength as evidence that the economy can withstand higher interest rates.
- Market tightening cannot replace Bank Rate action: Greene, who has voted for higher rates since June, warned against relying indefinitely on financial-market borrowing costs to deliver the necessary monetary restraint.
