YouSaid · the spoken record

Megan Greene

lines on the record: 55
first: 2026-05-11
most recent: 2026-05-11
sittings or episodes: 1
sources: podcast

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“Sure. Construction in London. Sure But I think the other point is maybe there are more creative ways of doing it that we haven't even thought of yet. So for instance, like. Could you do monetary policy on a weekly basis versus like a monthly decision? No, seriously. If the entire world is changing on a week-to-week basis, maybe you need to start making these decisions and like, yeah, I don't know. My point is like there may be creative solutions out there that we haven't even thought about.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And then the question, of course, is if the central bank is not the right entity to deal with these supply-side shocks, like should it, given its existing tools, which we touched on, like should it have new tools? I mean, a lot of people would say no because that's veering into fiscal and you want governments to decide that and democratically elected governments to decide that. But on the other hand, like if it keeps happening, it also feels somehow unsatisfactory to just say like, well, we're going to have to deal with this with like the existing toolkit. Yeah.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“But there are a bunch of interesting things to pick out of that conversation. I mean, I thought her point about the emphasis of central banks and economics in general on the demand side historically versus the supply side kind of captures a lot of the struggle that policymakers have had with the post-COVID economy, right? Like all of economics is very much focused on the idea of like, well, you need a healthy consumer who's spending, right? And going out and buying stuff versus like thinking about those supply-side shocks.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Joe, that was really fun. I have to say I'm a little bit jealous that Megan probably has a really nice office at the Bank of England building. I know.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Defensible to think that possibly there are. In my view, the risk is entirely on the upside, though. There's kind of a ratchet here. I think the risk to energy prices and also second round effects are probably on the upside rather than the downside. But I do think that it's worth waiting for a little while to see kind of what happens with the progression of this war and therefore see what we can infer about how it will propagate through the economy before we make a move. Megan, it was so great to catch up with you. Congrats on the new role. I know we're a little bit late to it, but it was really great to be able to actually ask you all the questions about what you're doing right now. Yeah, thanks for having me. It's great to see you. Yeah.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. Yeah. You know, I think given that it will take too long to get evidence for second round effects to actually address them, I think that's a fair question. You know, if you don't hike now, then when are you going to? To my mind, a big contribution was that we are going to get some news over the next six weeks or so, but over the next couple of months. And a lot of that news will not be definitive evidence of second round effects, but it will be evidence about energy prices, which are a big feed into what's going on with the economy and with inflation. So is there a state of the world in which restrictiveness that we already have in our monetary policy stance, because we are restrictive, I think, just not hugely so. But is there a state of the world in which actually if the war ended tomorrow, the Strait of Hormuz opened up completely, whether that restrictiveness could squeeze out the second round effects that have already been kicked off by this crisis? I think it's...”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Does that make your job at the BOE a lot more difficult if you're trying to judge those spillover effects from U.S. bonds? So I think we don't understand the spillovers just from what the Fed is saying about them. We're also looking at the US economy and the fundamentals. So forward guidance has its place, I think. You don't need it all the time. I don't think that means we won't understand what's happening in the U.S. economy and therefore how that might spill over into the UK economy. I think there are just different approaches on this stuff. So if I look over the whole of this conversation, you're talking a lot about being wary of inflationary risks. And we talked about maybe the public and companies being more prime towards inflationary risks than they were previously. Why did you vote to hold rates last week?”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Sometimes it's just an unknown, but being a bit more curious about these wedges, why haven't things panned out in a way that we can perfectly explain? Maybe there's something else going on because of these supply shocks. I think there's a lot of work to be done in that area too”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's a good question. I think probably if you're making decisions about the supply side of the economy, often that comes down to questions about choosing winners and losers. And that's not what independent central banks are here for. That's what elected politicians are there for. So I think some of these solutions have to come from elected officials and not from central banks at all. But understanding that it's the multiplicative effects of multiple supply shocks rather than just looking at them in concert is important. And also, you know, we look at decompositions of inflation over the past. And you can't explain them all using standard channels. There's just kind of a wedge. And sometimes that's a judgment that we've made.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“In an age when you have this much uncertainty, you need to stop thinking about your very specific forecast where you do get out, whether inflation is 0.2, percentage points higher, or lower. In year three of your forecast, it's kind of neither here nor there. It's much more about kind of scenario analysis. And risk management, when you're making decisions about interest rates, so figuring out if we thought we were in this state of the world and it turns out we're in a different one, how bad could we mess that up? And how do we minimize some of those costs? And that's a different way of thinking, I think, about central banking than what we had in the past.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Change whether it's physical risk or transition risk if it crystallizes that represents a negative supply shock as well. So we're no longer at a point where we can kind of say, well, one day we might have some of these things happen. I think we're already there. And so this old adage that you should just look through negative supply shocks because you can't address them directly. I don't think it works when you keep having them wave after wave. And I also think there's just a ton of uncertainty now. A lot of economists feel like they had a framework for understanding how the global economy worked and it doesn't work anymore, but no one's quite identified the new one. And so”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think we already have, in fairness. So I've spoken to some of my predecessors, Kristen Forbes. I saw recently, for example, and she said, you're so lucky my entire time on the MPC I never voted to change interest rates at all. Oh my God. That's right. And now I've seen it conceivable now. That's right. And so I've seen a hiking cycle, a holding cycle, and a cutting cycle. And who knows what comes next off the back of this shock. And so I do think that that has changed, but also, you know, I think getting hit by successive shocks is just here to stay. And I think you can identify some already. So if economic statecraft is how major world powers are going to operate using economic tools for foreign policy goals, those just represent negative supply shocks for someone. And so, you know, I think we will continue to have negative supply shocks, whether it's tariffs or export controls or investment controls, all of these things. And then climate.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And I would say that the model where we have externals and internals and where descent is totally normal does work in that we certainly don't agree on everything. In fact, often we don't agree on important things and that comes out in our votes. But I think that's how you make sure that you're making the strongest decisions.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's an incredibly involved process to produce these scenarios, to think about different states of the world, to try to identify where we might be in these scenarios. And then most importantly, to try to figure out how we would respond if we were in any parts of these worlds. And so to figure out our reaction function, we look at the market curve, but we also look at a whole bunch of policy rules. They're all different. And in figuring out where we forecast from, we have to figure out where we are. We've used a whole bunch of different models, get loads of updates and research notes from our fantastic staff to help inform us of where we're starting from, because that's always really important. So, you know, in a forecast round, it's about three weeks of intensive discussions and research and notes, and then figuring out how to communicate that to the outside world, I think, is really important too. So it is a really involved process.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so we meet every six weeks, and every other time we produce a forecast. So when we produce a forecast, it's a more involved process. This last round was particularly interesting because we didn't produce a forecast. We said, you know what? Things are so uncertain. We're just going to produce three scenarios. We're not going to give you weights on them. Who knows what's happening with energy prices? But we produce three different scenarios and they were based on kind of what energy futures curves might look like, how energy prices might evolve, and then also second round effects off the back of that. And so as you can imagine in the good old days, not good old days, in the old days, when we only produced a central forecast, that was a less involved process, I would say, than now producing a bunch of scenarios to think about risk and uncertainty. And now I think we're facing kind of night and uncertainty. So radical unpredictability and uncertainty.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“That had nothing to do with the mandate for what it's worth. But so in my time at the Bank of England, we've only hit our inflation target for one or two months, maybe. And so while I've been at the Bank of England, and I think generally it's the case, really 2% inflation is the target, and we're working tirelessly to hit that. So the secondary part of the mandate, which is subject to that, we haven't achieved that yet. So that is the primary focus.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so to be clear, our mandate really is 2% inflation sustainably in the medium term. Subject to that. Support the goals of the government, and they change. And this is a mandate that the Treasury sets every November. So once a year they look at it.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think that's right, actually, but you can't ignore these spillovers. So financial conditions were to tighten in the US, that would feed through to the UK, and financial conditions, I mean, of course, the reason matters, but if it's because of rate hikes in the US, it could mean that our financial conditions tighten as well. And then that feeds through into kind of our view of how restrictive our monetary policy stance is and how we manage inflation towards our 2% target.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so as I mentioned, there's significant read-through from the U.S. Treasury market into the UK guilt market, rightly or wrongly. So if you look at economic indicators that come out and how they influence our financial conditions in the UK, the indicator, if it surprises that it influences conditions here the most is UK inflation, thank goodness. Secondly, is US inflation? I think third might be non-farm payrolls in the US. It's not at all clear why these things should actually be influencing financial conditions in the UK, right? But I think part of that is an implicit assumption that the Fed is the world's biggest economy central bank. And so when the Fed does something, everybody kind of has to.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“So, no, that's not a significant impulse that we're looking at. Mostly, we're just looking at it through financial conditions. Got it.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I mostly look at this through financial conditions. And so if you get bond yields rising, then that's tightening financial conditions and that feeds through into the economy. And then there's a judgment to be made about what monetary policy should do about it.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“No. So I neither have nightmares about them, nor do I wish I could tweet about them. I think markets are sometimes efficient and sometimes get things totally wrong. And so we have an entire function at the bank that talks to investors to get a sense of kind of what's behind their positioning, what they think. Often it's what do they think about us? What do they think we should be doing? What do they think we will do? And I think that's all worth understanding because like I said, sometimes they get things right. Certainly not always.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think it contributes to government borrowing costs. So we're sitting in the UK a day after long-term rates went up. Some of that is to do with the Strait of Hormuz. Some of that is to do with true social posts. Some of that may be because there are local elections coming up, and I think there's just a whole bunch of positioning around that in a guilt market, which is pretty niche and fairly small relative to the U.S. Treasury market in particular. So I think that's all worth considering as well. And that all feeds through into financial conditions.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, so I mean, actually, the government has legislated some consolidation given fiscal rules, and so that is exactly what we put into our forecast. And so that's just one of the conditioning assumptions is what's legislated, we assume will happen. And then we base our forecasts off the back of that.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, but I mean, the way that we think about fiscal policy is we take exactly what's legislated and we put that into our models. So we stipulate that, don't.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“So it has some supply, not massive amounts, and I think part of the trick is it's also very exposed to gas prices, which were what went up so dramatically when Russia invaded Ukraine. And then in the UK electricity prices are keyed off of gas prices. So then electricity is particularly vulnerable as well. So unfortunately, I mean, the US has kind of energy independence at the moment. The UK is nowhere close to that position.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“No, we have tools that are uniquely designed for demand side problems. They can't really address supply side problems. And so we've always learned to just look through them and consider sort of underlying inflation, underlying growth. And I think that when you keep having negative supply shocks and you consider that households and businesses are more attentive to inflation, that they're setting prices more often, that some kinds of inflation are more salient for households and businesses and other, particularly food and energy inflation. And we keep having increases in both of those things, then that eventually gets embedded into people's expectations and then their wage and price setting. And so that creates the kind of inflation persistence that I've been worried about even before this invasion of Iran, but now I continue to be worried about it.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and so I think that's a concern. And the way that central bankers have approached negative supply shocks has always been you just look through them, they're temporary, you know, Bank of England can't do anything about the Strait of Hormuz, for example, can't actually address it. We have”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, we do, insofar as you can say, there hasn't been a whole lot of investment in the UK, starting with the global financial crisis. I think most people pin that on Brexit and Brexit didn't really help. But it predates Brexit. And so that has been a long-term drag on potential growth, productivity growth. We assume that productivity growth in particular will rebound to its long-term trend. And I'm not sure that that's right. I think my own view is that the risk to that is entirely on the downside. you know a lack of investment is part of it and then on top of that i mean i i understand how you're splitting these out but if you keep getting negative supply shocks then eventually that does feed through into potential Growth”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so it's not that we didn't ever talk about it in the intro, but we did like a real deep dive on the supply side of the economy to try to measure productivity growth, total factor productivity. I mean, really deep dive. And it really was a once a year event. And now we do it all the time because obviously the supply side moves more than we had expected. We keep getting hit by supply shocks. But, you know, when we look at the supply side of the economy, there is no judgment that we've put in on the supply side to do with AI. So possibly it's in our assumptions about productivity growth just through some assumption about investment, but generally we haven't made a judgment that over the next three years AI will meaningfully impact productivity. And I'm not sure that that's right. I think the timing of this is the hardest part.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“All the time now at the Bank of England. When I first started, we only looked at it once a year because it's not supposed to move around that much, but we've learned actually.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, so the bank has done some research on how AI is affecting the labor market in particular, and there's some nascent evidence that maybe those industries that are more exposed to AI are seeing fewer job openings than industries that are less exposed, which you can imagine. Youth unemployment is particularly high in the UK. So I think it's quite easy to jump to a conclusion that suggests that it's very difficult to get a job if you're just coming out of uni. And maybe that's an AI effect, but I think there's actually very little evidence to directly make that link. And so there isn't much evidence of that. It's not just the labor market, of course, though, as I mentioned already, I'm worried about the supply side of the UK economy. So most of the supply shocks we've seen over the past couple years have been negative supply shocks. AI represents the one potential, positive supply shock that we might see coming down the pike. And so that could be possible. We look at the supply side of the equation.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And so, as you're in a rate cutting cycle, you would expect consumers to spend a bit more. We're not finding that so much. So, this is one potential explanation for why consumers aren't spending more. It could also be scarring from previous bats of inflation as well, but that's going to feed into the current conjuncture because one of the concerns, of course, I'm worried about inflation. I think that's paramount, and I think the risks to inflation are on the upside. But of course, you have to offset that with the risk of weaker demand. And if consumers aren't spending in the UK because they're scarred from previous experiences, then they're looking at this energy.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Whereas in the US, you can't. So there's an entire supply problem in the US that we don't face supply problems in real estate in the UK, but for completely different reasons. So that's a difference that's worth taking into account as well. But it's also meant, even though it's a shorter fix that we have here, it does mean that over the course of this hiking and cutting cycle, even though rates have been coming down for a while now, consumers haven't really been spending. And I think one of the reasons for that is that even though rates are coming down as people come off a five-year fixed mortgage, their own debt servicing costs are jumping massively from where they were when they first”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Mostly it's two and five year with, I think, an increasing number of variable mortgages. And so what you find is that it does transmit a bit more quickly, but it's also very different in the US. In the UK, you can port your mortgage with you.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so we've done a lot of looking into the monetary transmission mechanism to see how the change in the structure of the UK mortgage market has affected things. Because to your point, in the UK, we weren't always all on two and five-year fixed mortgages. In fact, used to have longer term fixes. You've had periods with variable mortgages today.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Much weaker than it is now, you had unemployment of 8% in the UK, and you had some second round effects then. So right now the economy is somewhere in between those two. So we will get some second round effects. It's impossible to calibrate them exactly. In advance, the trick for us also is that, you know, we kind of know how to measure direct and indirect effects. We can do that pretty easily. The second round effects are pretty difficult to measure. But of course, if we wait until we have real concrete evidence of them, we're too late in responding. So we're going to have to make a judgment, a proactive judgment, in advance about the size of the second round effects that we're going to want to lean against so that we can lean against them in time.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“At the time. So in 2008, 2011, 2014, 2022, you had second round effects in all of these situations. But the economy was very different in these different periods. We tend to look at 2022 because it's the most recent one, and I think for a lot of people, kind of the most scarring one, when you had energy costs go up so much. And in 2022, of course, it's worth remembering we had just reopened after COVID, so you did have pretty strong demand. And also the labor market was pretty tight. That's not the case now, actually. We have much weaker demand in the UK economy, and we have a much weaker labor market, and it's continuing to weaken. So we have slack in the labor market. So that suggests that we shouldn't get the same degree of second round effects now that we did in 2022. I think that's of little comfort, actually. Those were pretty extreme second round effects. I also look at 2011 when the labor market was actually”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And so you see food prices start to go up, which I think we probably will see. And so those are indirect effects. And the jury's out a little bit amongst the central banking community on whether you should try to lean against indirect effects or not. Generally, you should try to lean against some of them, but not all of them, again, because of lags in monetary policy. The real kicker is second round effects, and that's when actually all these price increases start changing wage and price setting behavior so that you get individuals and households saying, well, I can't, my money's just not going as far anymore. You're going to have to pay me more. And then firms might say, fine, we'll pay you more, but now our costs are higher. So we're going to pass that through in higher prices. And that can turn into a bit of a spiral. We've looked at past supply shocks in the UK, and every single one of them has had second round effects, but to very differing degrees, depending on the state of the economy.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, so the way that we think about these kinds of shocks propagating through the economy, it's sort of in three different phases. The first phase is kind of direct effect. So when you have an energy shock that automatically makes energy prices higher for everyone. In the UK, we actually have a price cap for households, the off-gem price cap. And so households have been shielded from that bit until July. And then they'll see energy costs go up. So this could happen in stages. But in any case, monetary policy doesn't kick in for 18 to 24 months. So it kicks in with a lag. So if we were to respond to that right now, by the time it hits the economy, it's just too late and we could risk suppressing activity unnecessarily. So mostly you look through direct energy effects. Then you think about indirect energy effects. So firms that are using energy pass it on, for example, food production is a great example. It's pretty energy intensive both through fertilizer but also transport.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, and the size of the shock matters too, so inflation was 11% a couple years ago. That was on the front page of every newspaper households kind of knew about it. They saw it at the grocery store. So we've done a lot of research showing that households and businesses are possibly just more attentive to inflation. And particularly once inflation comes within a certain band. So there's a threshold. It used to be no one paid attention to inflation if it was below 4%. That ban has actually shifted down. So in the UK, we think that if inflation is somewhere between 3%, 3.5%, that's the threshold at which people actually notice it a lot more. So if you then have another negative supply shock and inflation go up, people will be much more sensitive to that. We also have done research showing that people are more sensitive to upside surprises in inflation than downside surprises in inflation. And so that's a concern given we're now facing rising inflation. And then for firms, when they're looking at inflation,”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Of me thought, gosh, is this going to be irrelevant in six months when I finally give this speech? Of course, it's only more relevant now. But I was already worried about some of this inflation persistence and some of the second round effects from the last couple of negative supply shocks, even before Iran was invaded. And of course, since then, we've now had a negative supply shock, an energy shock, and that stands to push inflation up and growth down, which is a terrible situation for a central banker to be in.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And hay settlements were due to come in a bit lower this year. Hay settlement growth was due to come in a bit lower than it was last year. So this disinflationary process had signs of stalling out. Also, if you look at inflation expectations, so household inflation expectations were really elevated before Iran was invaded. In fact, up until February, they were above what you could explain looking at historical relationships between inflation outturns and inflation expectations. So it was a concern that households were thinking that inflation was going to be higher. That could feed through into wage setting, which could explain why wage growth was coming off more slowly than we'd expected and therefore price growth was coming off more slowly than we'd expected. So there were already some signs of some persistence from previous shocks left in the economy. In fact, I've been working on a speech on second round effects since before Iran was invaded and part of the...”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Wage growth was going to drop a little bit. That's right. Not wages. Wage growth. And also we have agents who are based around the country who go and talk to firms. They do a whole survey on pay settlements.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“At some of the forward-looking indicators for wages and also for prices, those actually seem to be stalling out. So we run a survey called the decision makers panel, the DMP, where we ask companies about their own price expectations a year ahead and their own wage growth expectations a year ahead. And their own price expectations a year ahead had pretty much stalled out, so they weren't really coming down anymore. Also, more worrisome in my view was what they thought about wages a year ahead, where they thought they were going to drop a little bit from last year. So not much, not as much as we had expected.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so part of that story is the supply side, which is also incredibly weak. So, if you had stronger growth, that could be inflationary. But I think it's worth thinking about where the UK economy was before the war in Iran, before we had this energy shock, because I think my and others views on where we are right now very much depends on where we started from. So before, a few months ago in February, you know, we had inflation that was still above target. It was coming towards target, but was still above target. We've had inflation above target for the best part of five years now in the UK. So it's been above 2% for all but one or two months in the past five years. And that's off the back of a couple of successive shocks, particularly COVID and also the Russian invasion of Ukraine. And so as we were looking at inflation start to come down towards our 2% target, it had been coming down more slowly than we had hoped since I got here, in fact. And if you look”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“And so demand is pretty weak in the UK, but actually the supply side is pretty weak as well. And as you mentioned earlier, Joe has been hit by a number of successive supply shocks. And so we have growth that's there. There's some, but it's pretty weak. And even though you have variations, we have monthly GDP data in the UK, which we don't have in the US. That was a real surprise to me. But there are variations in the monthly GDP data, but underlying GDP, which is what we tend to look at and we build it based on a bunch of surveys, that's pretty weak, you know, 0.2% growth per quarter. So that's not significant. That said, the supply side of the economy is also pretty weak. And so if you had more demand than that, that could actually end up becoming inflationary.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, particularly on a Tuesday through a Thursday, less so on a Monday or Friday, and people aren't necessarily coming into the office. Look, the UK economy has been pretty weak. It's been weeks since I started this role three years ago. And the question is why it's so weak. And most economists, you guys included, I imagine, think of the economy through the demand side because that's what we were all taught for generations to just think about demand.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so our mandate is to achieve price stability of 2% inflation sustainably over the medium term and then subject to that to support the goals of the government. But it really is, whereas the Fed does have a dual mandate, we really have one primary mandate and the rest is secondary to that.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source
“So, no, there was no handbook, but I did have to get up to speed pretty quickly, including up to speed with kind of the data in the UK, which is quite different from the US. But my role really is about looking at the UK economy, trying to understand what's going on, but also understanding how there are spillovers from other places. By way of example, before the pandemic, when the guilt yield curve moved about a third of that move was usually from outside the UK entirely. So mostly from the US and also the Eurozone, since the pandemic, it's been about half of the moves in our yield curve. So financial conditions are affected pretty significantly by what we have absolutely no control.”
2026-05-11 · Odd Lots · The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks · IDENTIFIED FROM THE TRANSCRIPT · source