Bank of England policymaker Swati Dhingra said that the Bank of England, which at its February meeting raised the interest rate to the highest level since 2008, should wait for the impact of its actions on the economy before taking new measures. She warned that the Central Bank risks damaging the economy unnecessarily by raising interest rates too high.
At the February meeting, seven out of nine members of the Monetary Policy Committee (MPC) voted for a 0,5% rate increase, while two MPC members (Swati Dingra and Silvana Tenreiro) voted to keep the rate at 3.5% per annum.
"Given the signs of weakening of external price pressure, I believe that at this stage the Bank of England should adhere to a wait-and-see position. But if the inflationary situation changes, the Bank should be ready to react," Dhingra said, adding that a pause in the monetary policy tightening cycle will allow the economy to steadily return to the 2% inflation target in the medium term.
Financial markets now fully price in a further 0.25% increase at the March meeting of the Bank of England after yesterday's hawkish statements by Fed Chairman Powell sharply increased the likelihood of accelerating the pace of monetary policy tightening.