BOE's Greene Says Case for Rise in Key Interest Rate is Growing

By Paul Hannon

The case for raising the Bank of England's key interest rate grows stronger the longer the conflict in the Middle East continues, and action may be needed within the next few weeks, a member of the Monetary Policy Committee said Tuesday.

The BOE left its key interest rate unchanged in April, and investors expect another decision to hold when the MPC next meets on June 18.

A number of policymakers have noted that the rise in yields on government bonds since the start of the conflict has already led to a rise in borrowing costs for households and businesses that should help cool price pressures.

However, Megan Greene said the MPC can't rely on markets to do its job, and yields will likely fall back if the BOE doesn't raise the key rate.

"I think the case for hiking rates grows as the conflict wears on and believe a tightening in monetary policy over the next few weeks or months may be necessary," she said in a speech.

Her comments suggest that Greene may vote for a rise in the key rate to 4% from 3.75% later this month. She said that she had considered voting for a rise in borrowing costs at the April meeting.

Write to Paul Hannon at [e-mail]

(END) Dow Jones Newswires

06-02-26 1139ET