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Investing.com -- Bank of England (BoE) policymaker Megan Greene said on Tuesday that the recent uptick in U.K. inflation may signal a more persistent trend rather than a brief spike, urging caution on interest rate cuts.
"I worry about the near-term profile for inflation this year, which in my view now resembles more of a ’plateau’ than a ’hump’,” said Green during her speech at the National Institute of Economic and Social Research.
Greene, who supported holding rates steady at the central bank’s latest policy meeting, said that mixed signals from the data are contributing to her cautious stance.
"Noisy data means that it will take longer for me to take comfort from recent disinflationary trends," she said. "Given the period of elevated inflation through which we have just come, I think price stability is the key priority."
The BoE held interest rates steady at 4.25% on Thursday, with six of nine Monetary Policy Committee members voting to keep rates unchanged and three supporting a 25-basis-point cut. Economists expect the first rate reduction to come in August.
The central bank cited weak GDP growth and a loosening labor market as signs that “a margin of slack has opened up over time.” Wage growth is also cooling, and the Committee expects “a significant slowing over the rest of the year.”
While acknowledging ongoing disinflation, the BoE maintained that “a gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate.”
It also emphasized that “monetary policy is not on a pre-set path,” underscoring uncertainty in both economic and geopolitical conditions.