The Chancellor has appointed Swati Dhingra as an external member to the Monetary Policy Committee for a second term.
Dhingra, an associate professor of economics at the London School of Economics, is known for her dovish views and has voted for a 0.5 percentage points cut at the MPC’s last meeting in February, when the bank cut rates by 0.25 percentage points with a majority of seven to two.
Her re-appointment means she will continue to hold the post until August 2028.
Advisers and industry experts have welcomed the move, saying it could “tilt the scales towards earlier rate cuts this year”.
Gabriel McKeown, head of macroeconomics at Sad Rabbit Investments, explained: “As a well-documented dove, Dhingra has consistently argued for more aggressive rate cuts in response to economic fragility, however with her voice set to remain in the debate, the question now is whether the MPC’s more hawkish members will soften their stance as inflation trends lower and growth risks build.”
He said investors should be asking themselves whether the market is still underpricing how quickly rate cuts could arrive.
Currently two more interest rate cuts have been priced in for this year by the bond market.
McKeown added: “A tactical position in global fixed income, particularly in markets where policy divergence plays out, could provide a hedge against the risk of UK rates moving lower at a faster clip than previously anticipated.”
Andrew Montlake, managing director at Coreco, a mortgage brokerage, said Dhingra’s reappointment was a potential boost for borrowers and businesses alike but he cautioned the were hurdles ahead.
He said: “At the last meeting, she preferred a 0.5 per cent cut in bank rate, reflecting her desire for stimulus to get the economy moving again.
“But with inflation creeping up again and potentially set to go higher in the months ahead, she may have her wings clipped.”
Similarly, Ben Perks, managing director at Orchard Financial Advisers, said: “The reappointment of a ‘pro-cut’ member is welcome news and bodes well for further cuts this year.
“She’ll be fighting borrowers’ corner and looking to ease pressure by backing cuts later this year.”
Appointments not ‘automatic’
Appointments to the MPC are not automatic but considered on their own merits, the government said.
Dhingra’s three-year term was due to end on August 8, 2025 but has now been extended for a further three years.
The MPC, which makes independent decisions about monetary policy, comprises of the governor of the Bank of England, three deputy governors, the Bank of England’s chief economist and four external members.
The appointment of external members is designed to add external expertise to the decision making process.
As such, each member has expertise in the field of economics and monetary policy.
carmen.reichman@ft.com
