BoE’s Greene says it is appropriate to proactively tighten our monetary policy stance

Bank of England's (BoE) Monetary Policy Committee (MPC) member, Megan Greene, said on Wednesday that it was appropriate to "proactively tighten ‌our monetary policy stance" to ward against the risk of wage growth getting stuck at higher levels and firms passing those costs on.

Key quotes

It is appropriate to proactively tighten our monetary policy stance to lean against the risk of wage growth getting stuck at higher levels. 

Data shows wage growth in the UK is too high. 

There is less labor market slack than thought.

It's appropriate to proactively tighten monetary policy.

Market reaction

At press time, the GBP/USD pair trades 0.51% lower at around 1.3275.

Greene flags proactive tightening as UK wage risks rise

BoE’s Greene delivered a notably more hawkish message, with a 9.4/10 FXS Speechtracker score versus a 7.7/10 historic average, signaling a clear shift toward tighter policy. The emphasis that wage growth in the UK is “too high” and that labor market slack is “less than thought” underscores concern that inflationary pressures could become entrenched.

The call to “proactively tighten” the monetary policy stance to prevent wage growth from getting stuck at elevated levels reinforces a pre-emptive, hawkish bias. For GBP, this raises the prospect of higher-for-longer rates or additional hikes, supporting the currency on expectations that the BoE will lean more aggressively against persistent domestic inflation risks.