A Bank of England official has cautioned that British households are “paying the price” of high borrowing costs, which are damaging living standards and the broader economy.
Swati Dhingra, a member of the Monetary Policy Committee (MPC) since September 2022, argued that interest rates remain too high, discouraging investment during a period of economic weakness. She has consistently advocated for lower rates and warned that economic growth is unlikely to resume unless rates fall further from their current level of 4.75%.
Speaking to Bloomberg TV, Ms. Dhingra highlighted the challenges facing businesses and consumers:
“We’re really paying the price in terms of weak consumption, with businesses reducing investment due to the broader macroeconomic outlook and the rising cost of financing. This combination of weak consumption, declining investment, and potential damage to supply capacity is particularly concerning.”
While not directly referencing Rachel Reeves’s tax-raising budget, Ms. Dhingra noted that the “broader macro outlook” is adding pressure on business investment.
Indicating her support for further rate cuts, she added:
“I believe the current stance is overly restrictive, weighing heavily on living standards, supply capacity, and investment. To restore normalcy in the economy, we need to begin easing policy measures.”
