Bank of England's Concern Over Labor Market Slack and Wage Growth

Megan Greene, a member of the Bank of England's Monetary Policy Committee, highlighted on Tuesday the increasing slack in the British labor market. Despite this, she noted that wage growth is not decelerating as expected, remaining "above what our models can explain."

Inflation Expectations and Supply Concerns

Greene reassured that inflation expectations are still anchored but voiced concerns over their potential rise. She emphasized her worry about weak supply more than demand, suggesting that the economy's supply side is under significant pressure.

Impact of U.S. Tariffs on British Economy

Addressing the broader economic landscape, Greene argued that U.S. tariffs would, "on balance," have a disinflationary effect on the British economy. She also warned that "trade diversion could happen very quickly," pointing to the dynamic nature of international trade responses.