LONDON (Reuters) – The Bank of England will shortly add Megan Greene, global chief economist at risk management firm Kroll, to its board of rate-setters, replacing Silvana Tenreyro, whose term ends in July, the UK Treasury said Tuesday.
The hiring of Greene, who recently spoke about the need for higher BoE rates, could steer the debate in the Monetary Policy Committee (MPC) in a more aggressive direction, with the outgoing Tenreyro talking about rate cuts.
“While we don’t know too much about Ms Greene’s stance on monetary policy, what we can say is that it won’t be difficult for anyone to be more dovish than Ms Tenreyro,” said HSBC economist Elizabeth Martins.
Greene’s appointment brings a policymaker with financial markets experience to the MPC, following the most recent appointment replacing former Citi economist Michael Saunders with London School of Economics academic Swati Dhingra.
Before joining Kroll, Greene was Global Chief Economist at Manulife Asset Management and Head of European Economics at Roubini Global Economics.
In a presentation to investors last month, Greene described the economic fundamentals of the UK economy as “quite worrying” and warned that a recession was likely.
She said the BoE will need to keep raising rates after March because of strong wage growth and sluggish productivity – in contrast to Tenreyro, who recently warned the BoE would need to cut rates earlier than previously thought.
“I actually think the Bank of England has to end up hiking more to get inflation back on target…so the UK faces a big challenge,” she said.
STRUCTURAL BREAK
Like most economists, Greene said Britain’s exit from the European Union had hurt business investment, citing “the second hit of the Brexit referendum” as a major structural break for the economy.
“Megan Greene’s extensive experience in financial markets and the real economy will bring valuable new expertise to the MPC,” Treasury Secretary Jeremy Hunt said in Tuesday’s announcement.
Greene holds a bachelor’s degree from Princeton University and a master’s degree from the University of Oxford. Kroll currently lists her as working in New York.
She is also a fellow at Brown University in the United States and at the UK’s Chatham House foreign policy think tank.
Tenreyro, a professor at the London School of Economics, joined the MPC in July 2017 and will soon complete her second three-year term, the maximum for an outside member of the committee.
The BoE has hiked borrowing costs 11 times since December 2021, raising interest rates from 0.1% to 4.25% as it tried to keep inflation under control and bring it back to its 2% target.
CPI inflation hit a 41-year high of 11.1% in October and was still in double digits when February data was released last month. The BoE expects the CPI to fall sharply in the current quarter and to be below 4% by the end of this year.
Writing by David Milliken, editing by Andy Bruce, William Schomberg and Alex Richardson
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