Interest rates are expected to stabilize at levels higher than those seen before the pandemic, according to Megan Greene, a rate-setter at the Bank of England.

This reflects a growing consensus among central bankers that elevated borrowing costs will be necessary going forward. This marks a significant departure from the ultra-low interest rates that were prevalent before the pandemic, indicating a new era of monetary policy.

In a recent interview, Megan Greene mentioned that the long-run neutral interest rate, known as r*, has increased, a change that has already been absorbed by the markets.