BoE's Dhingra: If the US Greenback goes up, we’ve got to fret about price dynamics and UK inflation

Financial institution of England (BoE) Financial Coverage Committee (MPC) member Dr. Swati Dhingra cautioned that the UK (UK) might be dealing with a rocky street on inflation, particularly as knock-on results from the Trump administration’s tariff-heavy commerce insurance policies reverberate via the worldwide economic system.

Nonetheless, this is not Dr. Dhingra’s base case situation, noting {that a} rapidly-appreciately US Greenback (USD) could be the important thing spark for UK inflation metrics, one thing that does not seem like taking place to any vital diploma.

Key highlights

My vote for a 50 bps price reduce was partly to make a press release on the course of the economic system.

We would see some value pass-through from US tariffs, however I argue that the quantity could be fairly small.

I will not rule out a situation the place world commerce breaks up and the UK suffers inflation, however I don’t suppose that is the place we’re headed.

My working speculation is that greenback depreciation is just not going to place immense strain on UK import costs.

If the greenback begins to actually go up, we’ve got to fret about what trade price dynamics do for UK inflation.