Dhingra says UK rate hike calls overlook weaker growth than US
The Bank of England policymaker argues UK rates already sit above the Euro zone's, and growth trails the US, weakening the case traders make for further tightening.
Published
Swati Dhingra, a member of the Bank of England's rate-setting committee, has pushed back against growing market calls for higher UK interest rates. She argues the clamour ignores that UK growth is weaker than in the US, and that UK rates are already higher than in the Euro zone.
The Bank held its rate at 3.75% at its last meeting, with three policymakers voting for an immediate increase. Deputy governor Sarah Lombardelli has said wage growth remains too high for the inflation target to hold, and that tightening looks increasingly likely if energy prices stay elevated without clear signs of disinflation.
BofA has reversed its earlier call for a rate cut and now expects the Bank to hike in November and February.
Dhingra's comments reinforce a dovish tilt among some at the top of the Bank, running against that market pricing. Her point that UK growth lags the US, and that UK rates already sit above the Euro zone's, suggests policymakers see less need to tighten than traders do, leaving sterling and gilt yields exposed to further swings even after their recent rise.