Bank of England's Greene Cannot be More Dovish than Tenreyro

Above: File image of Megan Greene. Image © Informa Connect Global Finance.

"While we don’t know too much about Ms Greene’s stance on monetary policy, we can say one thing: it will be hard for anyone to be more dovish than Ms Tenreyro," says Elizabeth Martins, Senior Economist at HSBC.

Martins's comment comes in the wake of news that Megan Greene is set to join the Bank of England's Monetary Policy Committee (MPC) on July 05 for a three-year term.

She replaces current external member Professor Silvana Tenreyro who has been on the MPC since July 2017 and investors are asking what she will bring to the outlook for UK interest rates.

Tenreyro's departure is likely more significant than Greene's appointment, however, given her votes against rate rises since September 2022. She has also indicated she would vote for a rate cut before she leaves her role.

"So on balance, the committee probably becomes slightly more hawkish with Ms Greene’s appointment," says Martins.

Greene is currently Global Chief Economist at Kroll and the UK Treasury says she has a broad understanding of financial markets internationally and significant experience in advising leaders on the potential impacts of global macroeconomic developments.

The Treasury also appears keen to move away from filling the role with academics, such as Tenreyro and Swati Dhingra, who have tended to be reluctant hikers.

"Our view is that ex-BoE staffers and city economists (like Michael Saunders and Catherine Mann) have tended to be more hawkish than academics on the committee," says Martins.

Nevertheless, HSBC does not predict a significant shift in the trajectory of UK interest rates given the appointment of Greene.

"It probably won’t be a game changer for the direction of policy in the UK. There is a hawkish contingent and a dovish contingent on the committee, and then there is the central core group of members who tend to vote together. A policy to shift in either direction would require this central group (Governor Andrew Bailey and his Deputy Governors Ben Broadbent, Jon Cunliffe and Huw Pill) to move in one direction or the other," says Martins.

"We think it will be the data that engenders such a shift – not the influence of any one member," she adds.