The Bank of England's Monetary Policy Committee (MPC) member Swati Dhingra stated on Wednesday that monetary policy needs to be forward-looking because moderation of the policy stance requires time to implement and to feed through to the real economy. "Restrictive stance of monetary policy is expected to continue weighing on economic growth and living standards for more time, even if moderation starts now", she warned. The policymaker added that evidence to err on the side of overtightening is not compelling as it often comes with hard landings and scarring of supply capacity.
Dhingra also said that the outlook for headline inflation appears bumpy but downwards, and price developments strongly signal that inflation is already on a path of sustainably meeting the BoE's 2% target over the medium term.
She argued against waiting for lagging indicators of domestic relative price growth to fall sharply before reducing interest rates, noting that the delaying comes with a cost of foregone improvements in living standards and a risk of lowering supply capacity for the future.