Bank of England’s Megan Greene expects disinflation in UK to continue

Megan Greene, a rate-setter at the Bank of England, expects disinflation in the UK to continue. She believes US President Donald Trump's tariffs are likely to lower consumer prices in the country due to changes in global trade flows.

The British central bank expects the inflation rate to come down toward the 2% target over the medium term. Greene says the projected surge in inflation will be driven by on-off factors. However, the Bank of England should be aware of the risks of rising wages and prices, she adds.    

Besides, Greene is concerned that the UK economy’s anemic growth could be due to weak supply rather than low demand. The Bank of England expects GDP to improve over the next two to three years, mainly fueled by consumption. At the same time, Greene notes that the savings rate in the UK has picked up to over 11.5%. 

Meanwhile, traders have trimmed their bets on reductions in borrowing costs by the Bank of England. They forecast the central bank to hold rates steady at its next meeting on June 19, with the probability of a cut in August estimated at 50%.