Inflation unlikely to rise, time to cut rates – BOE’s Dhingra

Inflation in Britain is unlikely to rise sharply again, and the central bank should reduce borrowing costs, Bank of England (BOE) interest rate-setter Swati Dhingra stated.

In an interview with “The Rest is Money” podcast broadcast on Monday, Dhingra said, “Now is the time to start normalising (interest rates) so we can then finally stop squeezing living standards the way we have been to try and get inflation down.”

Since February, Dhingra has voted to cut the bank rate from its 16-year high of 5.25 per cent.

Recently, she has been joined by Deputy Governor Dave Ramsden, though the remaining seven members of the Monetary Policy Committee have kept rates on hold. Investors predict a roughly 50-50 chance of the BoE cutting rates by a quarter of a percentage point on August 1, the date of its next scheduled announcement.

Dhingra also mentioned that demand in Britain was too weak for inflation to rise again, having returned to the BoE’s 2 per cent target in May.

“I don’t see some kind of consumption boom, and if we’re going to start moderating from the very high level of interest rate that we are at now, it is going to take some time for that to happen, for us to moderate it as well as for that to then feed into the real economy,” she said.

Attribution: Reuters.