The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks

Megan Greene, an external member of the Bank of England's Monetary Policy Committee (MPC), joined Odd Lots to discuss setting interest rates amid persistent supply shocks. Drawing from her private-sector and international background, she explains the challenges of UK monetary policy, including weak growth, sticky inflation, and risks from events like the recent energy shock tied to tensions in Iran.

MPC Structure and External Perspectives

The MPC has nine members: five internal executives (governor, deputies, chief economist) and four externals from outside the Bank, like Greene, to counter groupthink. Externals work separately and bring diverse views—hers include business conditions and global spillovers, such as US and Eurozone effects on UK yields (now half from abroad post-pandemic). Votes are public, with dissents common (e.g., four last time, mirroring recent Fed splits), ensuring accountability. The Bank's mandate prioritizes 2% inflation sustainably over the medium term; supporting government goals is secondary and untested recently, as inflation has exceeded target for nearly five years.