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Bank of England’s Dhingra Presses for Faster Cuts, Arguing UK Inflation Drivers Will Fade

Her stance crystallizes an MPC split over how fast to ease given forecasts of persistently higher UK inflation.

Overview

  • External MPC member Swati Dhingra used a Times column to argue that recent UK inflation reflects administered or indexed prices and global commodity shocks that are likely to pass.
  • She urged further easing and has called for the Bank Rate to be lowered to 3.75%, below the current 4.0% after five cuts over the past year.
  • Dhingra warned that keeping policy too tight risks hurting growth, noting that wage costs explain 61% of price growth in market‑based services but only 27% in administered services.
  • Her view contrasts with fellow external member Megan Greene, who said policymakers should take a cautious approach to additional cuts given ongoing risks.
  • OECD projections now put UK inflation at roughly 3.5% this year, the highest in the G20, adding pressure to the policy debate over the timing of further reductions.