LONDON  - Bank of England interest rate-setter Megan Greene said on Thursday that uncertainty around environmental policy in Britain was hurting investment and would likely make inflation more volatile in future.

Her comments come after Prime Minister Rishi Sunak last week pushed back the timescale of key net zero pledges, including banning the sale of new petrol cars.

Speaking at a panel on the economics of climate change, Greene said policy uncertainty tended to cause companies to delay investment, citing evidence from the BoE's regional agents who speak to companies on a regular basis.

"In the UK the agents have been reporting that a bunch of investment has been delayed because of uncertainty around the environment generally, and also around policy," Greene told the WE_ARE_IN Macroeconomics and Finance Conference.

Greene, an American economist who joined the BoE's Monetary Policy Committee as an external member in July, said inflation was likely to be more volatile than in the past.

"A lot of it is driven by policy uncertainty. It's not our job to set policy, central banks aren't the best actors to set policy," Green said, of environment and energy policy.

"But insofar as all the actors in the economy aren't sure what the policy is going forward, the more inflation volatility there might be. So I agree there probably will be volatility around our 2% target."

She repeated her view that it would be harder to get inflation back down to 2% from, say 5%, than from 10% to 5%.

(Reporting by Andy Bruce; Editing by Sachin Ravikumar)