DR SWATI DHINGRA, an associate professor at the London School of Economics, is the first Asian woman to be appointed an external member of the Bank of England’s Monetary Policy Committee (MPC). That means she helps to decide whether the Bank’s interest rate goes up or down. So far she has shown she is more of a dove” – that is, she seemed keen to keep rises as low as possible when inflation appeared set to cross the 11 per cent barrier in the autumn of 2022.
What she is not keen on is Brexit. Before the parliamentary vote in December 2019 to leave the EU single market and customs union, Dhingra wrote with a colleague in LSE’s Brexit Economics series: “From an economic perspective, the best policy would be to cancel Brexit.”
That makes it distinctly odd she was appointed to a three-year term on the MPC beginning 9 August 2022 by Rishi Sunak when he was chancellor – and he is known to be a Brexiteer. Perhaps he wanted a fresh voice in the deliberations of the Bank of England. Once upon a time it was caricatured as the sanctuary for men in dark suits who wore bowler hats and hailed taxis with their umbrellas.
At the LSE, Dhingra was associate professor of Economics and Political Science. She did her undergraduate degree from the prestigious Delhi School of Economics, and obtained her Master’s and PhD from the University of Wisconsin–Madison. She was also a fellow at Princeton University.
Among her other activities, she has been a member of the UK’s Trade Modelling Review Expert Panel and the LSE’s Economic Diplomacy Commission. On 1 January 2023, she took up the position of director of the Review of Economic Studies. She was elected to the Council of the Royal Economic Society in 2021. She has also been a director of the Royal Mint Museum. Her research interests are international economics, globalisation and industrial policy. And she has taken an interest in “industrial development in India”.
Announcing the appointment, Sunak said: “Dr Swati Dhingra’s experience in international economics will bring valuable new expertise to the MPC. I am delighted to appoint her to this role and look forward to seeing her contribution to policymaking in the coming years.”
Dhingra responded: “I am very pleased that the chancellor has appointed me to join the Monetary Policy Committee. The work of the Committee is of great importance as the UK faces an exceptional cost of living crisis amid the global challenges of the pandemic and the war. It will be an honour to learn from the Bank’s vast expertise and regional visits, ‘to listen and to explain’, and to bring evidence to bear on the crucial policy decisions of the Committee.”
She replaced Michael Saunders, a former City economist who was considered more of a hawk on interest rates. Her arrival means one-third of the nine-strong policymaking group are women, for the first time since 2005.
The Bank of England governor, Andrew Bailey, welcomed her appointment: “I am very pleased to be welcoming Dr Swati Dhingra to the MPC. Her insights and perspective will be hugely beneficial to all of our discussions and we will benefit from her extensive research in international economics.”
The nine members of the MPC include the governor of the Bank, three deputy governors for monetary policy, financial stability and markets and banking, the Bank’s chief economist, and four external members, including Dhingra.
According to the Bank, “external members are appointed to make sure that the MPC benefits from thinking and expertise from outside of the Bank of England. A representative from HM Treasury also sits with the MPC at its meetings.”
The MPC is “also responsible for directing other aspects of the government’s monetary policy framework, such as quantitative easing and forward guidance. The MPC is responsible primarily for keeping the Consumer Price Index (CPI) measure of inflation close to a target set by the government, currently 2 per cent per year (as of 2019). Its secondary aim – to support growth and employment – was reinforced in March 2013.”
Dhingra didn’t just walk into the job. She was quizzed about her views and appointed “following an open recruitment process run by HM Treasury. A panel comprising of Clare Lombardelli (Director General and Chief Economic Advisor, HM Treasury), Tom Josephs (Director of Fiscal, HM Treasury), Dame Colette Bowe (external member of the Financial Policy Committee) and Dame Kate Barker (external member of the MPC from 2001 to 2010) interviewed a number of candidates and made recommendations to the Chancellor, which informed his decision.”
The fact she is an Asian woman probably didn’t do her any harm, since “the Treasury is committed to appointing a diverse range of people to public appointments, including at the Bank of England. The Treasury continues to take active steps to attract the broadest range of suitable applicants for posts.”
The MPC meets for three and a half days, eight times a year, to decide the official interest rate in the United Kingdom (the Bank of England Base Rate).
Dhingra showed she could more than hold her own she appeared alongside Bailey and Dr Catherine Mann, another external member of the MPC, for a grilling by MPs on the treasury select committee in November last year. At one point, Bangladesh-born Rushanara Ali, Labour MP for Bethnal Green and Bow, questioned the Indian-origin Dhingra.
On more than one occasion, the governor deferred to Dhingra. On Brexit, Bailey said: “Swati Dhingra is a great expert on this subject.”
On another occasion, on how trade had been affected by British withdrawal from the EU, Bailey urged Dhingra to bat for the Bank: “Our trade economist can answer that. We have a real expert here.”
On vulnerable groups that had been hit by Brexit, Dhingra said: “I will add one more demographic group, which is younger individuals. Typically the ones who enter the labour market in a recessionary environment are the ones who end up with perpetually lower wages.”
On trade she said: “It is going to show up as us being poorer, either in terms of lower profits, lower, real wages, or higher prices, which means consumers end up suffering. That is just a reality that we are going to have to face up to; that we are just poorer and there is no solution to that from monetary policy.”
She added: “It is undeniable now that we are seeing a much bigger slowdown in trade in the UK compared to the rest of the world.”
She said: “Broadly speaking, we are underperforming in terms of our exports, and of course that is going to show up in the current account deficit. We also know that with the currency depreciating…that has also had a significant impact, which is that everything we buy is becoming more expensive.”
