MediumIV Macro Policy & Sovereign Debt8 October 2026, Thursday
BoE's Greene warns against leaving inflation to the bond market
Bank of England Monetary Policy Committee member Megan Greene said in Cape Town on 8 October that relying on high bond yields alone to rein in inflation would be dangerous. Markets assign a probability above 80% to a hike in November.
According to a Reuters report carried by Investing.com, Greene spoke at a STANLIB Asset Management conference in Cape Town. She voted at the June, July and September meetings to raise rates by a quarter point to 4%. Greene said it was dangerous to assume markets would do the committee's work for it, and that at some point words had to turn into action.
The speech directly challenges Governor Bailey's line. The same report said Bailey had argued that higher market borrowing costs and mortgage rates after the start of the Iran war had bought the committee time before responding to energy prices. Greene's objection rests on the view that the rise in gilt yields reflects the term premium, the extra return investors demand to hold longer-dated debt, and is no substitute for the policy rate.
Markets are bracing for a hike. FXStreet reported on 9 October that the probability of a move at the November meeting is above 80%, with two 25 basis point hikes priced by February. Sterling rose to 1.3237 against the dollar on 9 October and to around 1.3250 in the European session. A November hike would take Bank Rate to 4%, the level Greene has voted for three times.
Talay assessment
Bottom line
Greene built the case of the minority that has voted for a hike at three meetings explicitly against Bailey's claim that the market had bought time. Markets already put the odds of a November hike above 80%. The debate is no longer whether a hike comes but how many steps follow. The likeliest path is a move to 4% in November, with gilt pricing setting the number of further steps.
Likely effects
- UK ratesNegativeWeeks
Pricing of a November hike keeps near-dated gilt yields elevated; expectations of two moves by February support the front end.
- SterlingPositiveWeeks
Expectations of a tighter BoE support sterling in a 1.32–1.33 band against the dollar.
- UK public financesNegative1–6 months
A rise in Bank Rate to 4% raises the government's interest bill and narrows headroom under the fiscal rules.
Possibilities, ranked
- 1November hike70%
The committee raises Bank Rate to 4% in November and signals at least one more step.
Watch: The vote split at the November meeting and February pricing
- 2One more meeting on hold20%
Gilt yields fall back and the majority sides with Bailey, waiting one more meeting in November.
Watch: The 10-year gilt yield and November odds through end-October
- 3A 50 basis point move10%
October inflation data beat forecasts and the committee raises rates by 50 basis points in one step.
Watch: UK September CPI data
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- November hike probability▼ 80%+
- GBP/USD▲ 1.3250