Higher rates ‘here to stay’, says rate-setting committee’s new member

The newest member of the Bank of England’s rate-setting committee has warned higher interest rates may be here to stay.

Megan Greene, who joins the Bank’s Monetary Policy Committee (MPC) tomorrow, said it would be ‘a mistake’ for central bankers to think inflation and interest rates will ‘automatically go back to the low levels we saw before the pandemic.’

Writing in the Financial Times, Greene added it was ‘too early’ to say if rates could return to pre-pandemic levels, noting that investments in green technology and artificial intelligence could ‘generate a wave of innovation that boosts productivity’.

The comments came as the pound performed better than all other currencies in the G10 group of major advanced economies as traders continued to bet on further interest rate hikes.

In the second quarter of 2023, sterling climbed 3 per cent against the dollar. It also logged its biggest increase in value against the Japanese yen for over a decade.