The Bank of England's Megan Greene on Monetary Policy in a World of Supply Shocks

In this episode of Odd Lots, hosts Tracey Alloway and Joe Wasenthal speak with Megan Greene, an external member of the Bank of England's Monetary Policy Committee (MPC), about the challenges of conducting monetary policy in an era defined by persistent supply shocks. Greene, who previously gained prominence through her finance Twitter presence, reflects on the transition from economic commentator to policymaker, emphasizing the increased responsibility and the unique structure of the BOE’s MPC, which includes external members to prevent groupthink and promote diverse perspectives. She discusses how successive shocks—ranging from the pandemic and war in Ukraine to the recent conflict in the Middle East—have undermined the UK’s already fragile economy, weakening both demand and supply sides. Despite weak growth, the MPC voted to hold interest rates, citing concerns about inflation persistence, particularly from second-round effects where rising prices and wages feed into each other. Greene highlights that households and firms are now more sensitive to inflation, especially above 3-3.5%, and that firms have shifted to state-dependent pricing, accelerating price pass-throughs. She also notes that the UK’s mortgage market structure means rate cuts don’t immediately ease consumer debt burdens, and that AI, while a potential future supply-side boon, has not yet significantly impacted the labor market. The episode concludes with a broader reflection on the changing role of central banks in an age of economic statecraft, climate risk, and structural uncertainty, where traditional demand-focused tools are insufficient and scenario-based risk management is now essential.