LONDON (Reuters) – Megan Greene, a member of the Bank of England’s (BoE) Monetary Policy Committee, said on Thursday that investors had not yet understood that central bank interest rates may have to remain at low restrictive levels for a certain period of time.

Structural changes in recent years in the world’s largest economies make rate hikes necessary, said Megan Greene.

“I think the markets globally have not yet woken up to this fact,” she told Bloomberg Television.

The American economist is one of the few members of the BoE’s board of governors to have voted in favor of a further rate hike during the last two meetings of the central bank, while the majority voted in favor of ‘pause.

How long interest rates need to remain restrictive in Britain will depend on the data, she said.

“There is reason to think that the economy may be structurally a little different. This suggests that we may need to remain restrictive for longer,” Megan Greene said.

UK financial markets show that a 25 basis point reduction in the Bank Rate is almost fully priced in for mid-2024, with two more likely to follow by the end of next year.

The BoE was not considering cutting rates, added Megan Greene.

This week’s data on inflation and employment is “good news” from the central bank’s perspective, she said, citing slowing services inflation and weakening wage growth.

“This is good news, but I think there is still reason to be concerned about continued inflation in the UK.”

Asked how she might vote at next month’s monetary policy announcement on Dec. 14, she said she wanted to see the economic data expected by then.

(Reporting David Milliken, written by Andy Bruce, Corentin Chappron, editing by Kate Entringer)

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