BoE's Greene: The supply side needs more attention

During a speech at the Adam Smith Business School of the University of Glasgow, Bank of England (BoE) Monetary Policy Committee (MPC) member Megan Greenebroke away from "tradiitional" policy planning rhetoric, warning that global central banks need to pivot into a different perspective on managing supply shocks that have become the norm rather than the exception.

Key highlights

Greene argued that central banks will now need to pay more attention to supply-side dynamics, not just "look through" supply chain and demand shocks, which has been the traditional central bank view of economic disruptions.

Using the recent COVID-19 pandemic and the ongoing war in Ukraine, Greene highlighted that supply shocks can frequently become persistent and interrelated, making them difficult to differentiate in real-time. Greene suggests that central banks may need to adapt their policy frameworks for an era where supply chain disruptions are not only more frequent but also structurally significant.

Greene suggests that central banks may need to adapt their policy frameworks for an era where supply chain disruptions are not only more frequent but also structurally significant.