Bank of England rate-setter Swati Dhingra has warned that higher interest rates could lead to a deeper and longer recession. Ms Dhingra, who last month called for half-percentage-point increase in interest rates while most of her colleagues opted for a 75 basis-point increase to 3%, said the Bank could deepen an expected recession if it pushed up borrowing costs further. She has warned that “you do see a much deeper and a longer recession with rates being much higher."
Ms Dhingra, a member of the Bank’s Monetary Policy Committee, also suggested that there were few signs that demands for higher wages risked a wage-price spiral, highlighting that while a wage-price spiral would mean wages coming in above inflation, real wages are currently falling. Noting Bank of England surveys suggesting a fall in investment and employment over the next two years, she warned: “The economic slowdown is here."
Read more: The Observer
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