BOE Dhingra: Restrictive financial coverage dangers damaging the financial system

BOE Dhingra in an interview with The Times, played down inflation worries and the calls for rate cuts. Says that factors driving rising costs will ‘soon fade’ and claimed the economy will be damaged by restrictive policy.

• Inflation outlook

  • Drivers of UK inflation (indexed/administered prices, global commodity shocks) will soon fade.

  • UK is not facing a “uniquely British” inflation problem compared with Europe.

  • Food price inflation is not worse than in continental economies; some UK-specific items (like chocolate) skew the measure.

  • Wage growth plays a smaller role in services inflation than headlines suggest (61% in market-based services vs. 27% in administered services).

• Policy stance

  • Restrictive monetary policy risks damaging the economy.

  • “We should not be overly cautious about cutting interest rates.”

  • Supports further cuts without endangering the inflation target.

  • Dissented at the last meeting, calling for a cut to 3.75% (vs. 4.0% current).

  • Stresses that administered price shocks (e.g., water bills, bus fares) are not responsive to tight policy.

• Economic risks

  • UK projected to have the highest inflation in the G20 this year (OECD sees 3.5%).

  • Warns prolonged tight policy will strain businesses and growth.

  • Divides within the BoE sharpen, as others (e.g., Megan Greene) advocate caution on rate cuts.

Bottom line: Dhingra leans decisively dovish — arguing inflation pressures will fade and warning that tight policy risks damaging growth. She’s pushing harder for cuts than the BoE consensus, widening the split on the MPC.

The GBPUSD is trading higher on the day (and ignoring Dhingra’s comments), staging a correction after the declines that followed Wednesday’s FOMC decision. The pair found a bottom late yesterday after briefly dipping below the swing level at 1.33309. That downside break quickly failed, with the low stalling at 1.3323, giving buyers an early foothold.

In today’s trade, the rebound gathered momentum as the price pushed back above a swing area between 1.33628 and 1.3378. This zone now serves as a pivotal short-term marker. For sellers to regain control, the pair would need to slip back below that area and build momentum on the downside.

On the topside, buyers are eyeing the next key target: the 50% retracement of the move up from the August 1 low, which comes in at 1.34322. A break above this midpoint level would strengthen bullish conviction and open the door for a push toward higher resistance levels.

For now, the pair is caught between these important technical markers — with 1.33628–1.3378 as the near-term support zone and 1.34322 as the key upside target that could fuel further gains if broken.