An external member of the Bank of England’s monetary policy committee (MPC) has indicated that the UK’s sustained economic growth strengthens the case for an interest rate increase before the end of the year. Megan Greene highlighted that robust performance throughout 2026 suggested that current interest rates have not been restrictive to the labour market or overall economy.

The International Monetary Fund (IMF) recently revised the UK’s annual growth forecast upward by 0.3 percentage points, projecting 1.3 percent growth for the year. The IMF also commended the government’s efforts to stabilize public finances. Despite ongoing challenges such as rising energy costs and inflationary pressures, the UK economy was reported to be the strongest among G7 nations in the first half of the year.

Greene noted that this solid growth trajectory continued into the second half, implying monetary policy had not yet significantly slowed economic activity. Although the Bank of England has maintained the base interest rate at 3.75 percent throughout 2026, it has signaled the possibility of raising rates to 4 percent by year-end.

Speaking on the sidelines of the IMF’s annual meeting in Bangkok, Greene emphasized that the economic data pointed to limited slack in the economy, suggesting room for a tighter monetary stance. She has frequently dissented within the MPC, advocating for earlier and more proactive monetary tightening to counter potential wage growth acceleration and inflation risks.

Greene proposed that it would be prudent for the Bank to adopt an “activist” approach by raising rates now to mitigate the risk of a broader inflationary spiral, with the option to adjust policy if inflationary pressures ease in the coming year. She also cautioned against relying solely on financial markets to contain inflation, pointing out that bond yields on UK government debt have reached levels not seen since 2007. This rise in yields has already contributed to tighter financial conditions by increasing borrowing costs for mortgages and businesses.

Meanwhile, other major central banks, including those in the United States, the eurozone, and Japan, have implemented interest rate increases during 2026, contrasting with the Bank of England’s more cautious approach so far. Greene’s comments underscore an ongoing debate among policymakers over the balance between supporting growth and managing inflation risks amid the evolving economic landscape.