Keep pulling the thread on Megan Greene.
The traditional central banking strategy of "looking through" temporary negative supply shocks is no longer effective in an environment where such shocks occur in successive waves.
Due to high uncertainty in the global economy, central bank decision-making should shift from focusing on precise forecasts to emphasizing scenario analysis and risk management.
The increasing use of economic statecraft, such as tariffs and export controls, by major world powers will be a persistent source of negative supply shocks for the global economy.
Megan Greene's personal view is that the risks to energy prices and second-round inflation effects are "entirely on the upside."
The 30-year UK gilt yield reached its highest level since 1998 on May 5th.
In a recent decision, the Bank of England's Monetary Policy Committee published three unweighted scenarios instead of a central forecast due to extreme uncertainty around energy prices.
The Bank of England's economic forecasts do not currently include a specific judgment that AI will meaningfully impact productivity over the next three years.
A long-term lack of business investment, which predates Brexit, has been a significant drag on the UK's potential growth and productivity.
The second most influential economic indicator on UK financial conditions is US inflation, followed by US nonfarm payrolls data.
Since the COVID-19 pandemic, approximately half of the movement in the UK gilt yield curve has been driven by external factors, primarily from the U.S. and the Eurozone, up from one-third pre-pandemic.
The Bank of England's primary mandate is to achieve 2% inflation sustainably over the medium term, with a secondary mandate to support the government's goals, subject to achieving the primary mandate.
Underlying GDP growth in the UK is weak, at approximately 0.2% per quarter.