Bank of England’s Greene Says Inflation Risks Entirely on Upside
BoE's Greene signals rate hikes on hold pending Iran war outcome, keeping GBP/USD supported near 1.34 as markets reprice UK tightening timeline.
🎯 Affected Markets
💡 Key Takeaways
- Megan Greene sees inflation risks skewed firmly to the upside.
- She conditions rate hikes on clarity from the Iran war, delaying immediate action.
- A June BoE rate hike is now priced with a 45% probability, up 10 points on the day.
- Sterling gained 0.3% to $1.3425, its highest in two weeks.
- SHORT-STERLING futures sold off, with Dec 2026 contract yields rising 8bps.
- The 2-year Gilt yield rose 6bps to 4.82%, drawing safe-haven flows away from bonds.
- Analysts warn that a full-blown Iran conflict could overwhelm hawkish BoE rhetoric.
📋 Executive Summary
📊 Sentiment Analysis
🧠 Reasoning
Greene stated 'the balance of risks to inflation is tilted to the upside' and that she 'would support rate increases once the geopolitical situation from the Iran conflict clarifies.' GBP/USD rallied 0.3% to 1.3425 on the hawkish signals, with money markets lifting June hike odds from 35% to 45%.
❓ Frequently Asked Questions
Greene said 'inflation risks are entirely on the upside' and that she would support rate increases once the uncertainty from the Iran conflict passes, according to her speech on May 11.
GBP/USD rallied 0.3% to 1.3425 as markets interpreted her remarks as hawkish, boosting the probability of a BoE rate hike in June from 35% to 45%.
The BoE wants to assess the economic impact of the Iran conflict on supply chains and energy prices before tightening policy, as Greene noted that geopolitics could cause 'significant dislocations.'
📰 Source
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