MNI BRIEF: Upside Inflation, Down Growth, Risks - BOE Greene

The Bank of England's expected recovery in demand and productivity growth may well not materialize and inflation could prove stickier than expected, Monetary Policy Committee member Megan Greene said in a speech at NIESR.

Households moving on to higher rate mortgages as their fixed periods expire and precuationary saving endangered the anticipated rebound in demand, she said, while there were upside risks to inflation as the current price rises could continue to push up on already elevated inflation expectations.

"I continue to think the risks remain two-sided but skewed to the downside on growth and to the upside on inflation. This is an uncomfortable place to be for a central banker," Greene, who with the majority on the MPC voted against a rate cut in June, said and she advocated continued caution and gradualism in easing policy. Speaking Tuesday, she looked at how quantative tightening is unfolding as central bank reserves are lowered towards commercial banks' preferred minimum range (the PMRR) and she said she was confident that QT could continue without losing monetary control as the BOE's enhanced repo facilities kick-in.