LONDON (Reuters) – Bank of England interest rate-setter Swati Dhingra said inflation in Britain was unlikely to rise sharply again and the central bank should bring down borrowing costs.
“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,” Dhingra told The Rest is Money podcast in an interview broadcast on Monday.
Dhingra has voted since February to cut Bank Rate from its 16-year high of 5.25% and she has been joined more recently by Deputy Governor Dave Ramsden. But their seven other colleagues on the Monetary Policy Committee have kept rates on hold.
Investors see a roughly 50-50 chance of the BoE cutting rates by a quarter of a percentage point on Aug. 1, the date of its next scheduled announcement on rates.
Dhingra said demand in Britain was too weak for inflation to take off again having returned to the BoE’s 2% 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 told the podcast.
(Writing by William Schomberg; Editing by Kim Coghill and Sam Holmes)
