MNI BRIEF: BOE Dhingra Says Tariffs Primarily Hitting Growth

The impact of tariffs and trade disruption is reflected primarily in weaker demand, not enduring high inflation, and monetary policy may not be best placed to offset the effects, Bank of England Monetary Policy Committee member Swati Dhingra said in a speech at the Central Bank of Ireland.

Dhingra looked at he evidence from Brexit, energy supply shocks and Trump tariffs and concluded that while the effects of trade disruptions are uncertain, as they depend on the magnitude of the shocks, the primary channel for tariffs hitting the UK currently is as "a drag on global growth" which feeds through to  "some downward pressure on prices in the medium term."

Dhingra has consistently supported easier monetary policy than the majority on the MPC and she said cited research suggesting that "monetary policy action alone is not well-suited to address systemic price shocks in key sectors" such as energy and food, and other policies fare better in curbing sector specific inflation. (see MNI INTERVIEW: BOE Should Hold In November - Sentance )