Swati Dhingra

DR SWATI DHINGRA is a member of the Bank of England’s Monetary Policy Committee (MPC) which sets the base rate that affects everything from mortgages to the interest borrowers are charged and savers are paid. Whether the base rate goes up, comes down or stays the same has obviously been of crucial importance during the cost-of-living crisis. The nine members of the MPC include the governor of the Bank (Andrew Bailey), the three deputy governors responsible for monetary policy, financial stability and markets and banking respectively, the Bank’s chief economist, and four external members, including Dhingra. It is fair to say there is little danger of groupthink while Dhingra is on the MPC. She has consistently pushed for the lowest possible base rate. In February 2024, for example, she “was the only person to vote for a reduction in interest rates at the latest meeting”, the Financial Times reported.

“She advocated a quarterpoint cut from 5.25 per cent.” The arguments of what should happen to the base rate are finely balanced. If set too high, it could stifle the economy. If set too low, it could add to inflationary pressures – and Liz Truss’s disastrous period as prime minister sent inflation soaring to 11 per cent. As the first Asian woman on the MPC, one has to assume it takes a certain amount of courage not to be intimidated by the eight other (white) members. The FT’s account was: “In an interview after the MPC held rates, the associate professor of economics at the London School of Economics (Dhingra) told the Financial Times she did not see much danger of resurgent price growth given the feeble state of household demand.” She told the FT she believed a cut in the base rate was unlikely to increase inflation, while other MPC members argued it was wiser to keep it unchanged for a little longer. Dhingra said: “I’m not fully convinced there’s some kind of really sharp excess demand in the economy coming from the consumption side. I’m more concerned that we might be underplaying the downside risks.

You might see the real economy start to get negatively hit in a more profound way – and I don’t see why we should be risking that.” And she also told the BBC: “The economy’s already flatlined. And we think only about 20 per cent or 25 per cent of the impact of the interest rate hikes have been fed through to the economy. So I think that there’s also this worry that that might mean that we’re going to have to pay a higher cost than we should be paying.” On this occasion she did not get her way but she argued her case. Her appointment to the MPC was announced by Rishi Sunak when he was chancellor on 12 May 2022, and she took up the three year post that carries a salary of £159,700 on 9 August 2022. She has never been keen on Brexit: “From an economic perspective, the best policy would be to cancel Brexit.” But Sunak, who picked her despite being a Brexiteer himself, 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.” 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.” Her response was: “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.” Bailey, the governor of the Bank, said he was “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 MPC meets eight times a year, including four joint meetings with the Financial Policy Committee. After a half-day “pre-MPC meeting”, usually the Wednesday before, meetings are held over three days, typically a Thursday, Monday and Wednesday. 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 was grilled by the treasury select committee and made to put into writing why she thought she was fit to be on the MPC. She was asked: “How has your experience to date equipped you to fulfil your responsibilities as a member of the MPC?” She gave as good as she got: “I have made significant contributions to research and public policy in economics, and to social science more generally. I specialise in international economics and have studied its interactions with work, inequality, prices and productivity. My work features analytical and technical abilities in theory and empirics, at both the micro and macroeconomic level. My research has been published in the world’s premier academic journals/books/ volumes, including American Economic Review and Journal of Political Economy. I have served on editorial boards of leading international peer-reviewed journals (Economic Journal, Indian Economic Review, Journal of International Economics, Review of Economic Studies).

“I have been involved in research and policy impacts that go beyond economics into several intersecting areas of the social sciences (law, politics, geography, health, environment). I regularly provide editorial expertise to academic journals/ books in the social sciences “I have not shied away from studying and asking big, sometimes controversial, policy questions and taking on leadership roles in these areas. I served as a commissioner on LSE’s Economic Diplomacy Commission, which provided recommendations on how best to advance UK’s economic priorities at home and abroad. “There is an exceptional cost of living crisis now and I hope to effectively use my skills and knowledge to bring a broad range of evidence from an array of empirical sources, including microdata and regional visits, to bear on the important policy deliberations and communications of the committee.” It could be argued that her experience of the wider world and of growing up in India has made her more aware of the need to do everything to help the most disadvantaged in society. She told the GG2 Power List “My father’s family moved from Pakistan after Partition and eventually settled in Saharanpur in Uttar Pradesh where I grew up. At 17, I moved to Delhi for college. My mum’s family is from Punjab and they had moved from their village to Ludhiana many years previously. My brother and I unfortunately did not grow up speaking much Punjabi as we lived in UP, and we always regret that, especially when we meet the Punjabi community here in the UK or elsewhere.

” As to how she got into economics, she explained: “Like most of us from immigrant families, education was always a big emphasis when we were growing up. I went to school in nearby Dehradun and studied economics for a couple of years.” She was affected and influenced by the political climate in India: “I grew up in some of the most turbulent economic times and in a very polarised and fairly poor area of India. My home town, Saharanpur, had several religious riots all through and the town in which I studied was split up. “The state was split into two so Dehradun went to the northern part of former UP and Saharanpur to the southern part. My father’s business was mostly in the northern part so this was a big deal for us.” She referred to the setting up of the Mandal Commission or the Socially and Educationally Backward Classes Commission in 1979 by the Janata Party government under prime minister Morarji Desai with a mandate to “identify the socially or educationally backward classes” of India. This followed “years of violent protests,” recalled Dhingra. “On top of all this was the economic stress and marginalisation of the area. I think that was a key motivating factor for pursuing economics. But it wasn’t really till I did economics in college at Delhi University that I appreciated the breadth of the subject and its ability to help understand and change society. “From college, I went on to doing a Master’s at the Delhi School of Economics and had the chance to work as a research assistant with two excellent mentors, Professor Aditya Bhattacharjea and Professor Jean Drèze. This spanned very different aspects of the Indian economy.

“I worked on competition and trade policy and got to learn some international economics, which I then pursued further during my doctoral studies. I also worked on many aspects of development, such as employment programmes and famine relief, where ethnographic work was strongly encouraged and this helped expand my horizons beyond bookish knowledge. I think anyone growing up in India is overwhelmed by the deep inequality of opportunity that persists despite the huge progress that has been made. And that sense of simple living and public service was very much alive when I spent my formative years in university in Delhi.” She talked about her journey to the west: “In 2004 I went from Delhi to Madison-Wisconsin for a PhD and specialised in international economics. This was a pretty set path for anyone who wanted to do further studies after having been trained in the Delhi School. I then got selected for a post-doc at Princeton University and a faculty position in Economics at the LSE in 2011. I got the job in 2010 but I delayed it by a year to go to Princeton. “This was my first ‘real’ job, after several teaching and research assistantships during further studies. I find myself extremely privileged to have met some of the most brilliant and publicly-minded people at the Centre for Economic Performance where I am based at the LSE – for example, Richard Layard, Nick Stern, John Van Reenen, and also Minouche Shafik, who has now moved from the LSE. Their contributions have shifted the public debate in the country and internationally in better directions, and that’s been a big example to live up to.” Dhingra told the Power List about other important influences on her thinking: “Two people stand out. I am lucky to be with my partner, Stephen Machin, who is one of the most outstanding economists in the country and whose work has helped put social mobility on the policy agenda. “In my early formative years in Delhi, I had the chance of working with Professor Jean Drèze, who lives with and fights tirelessly for the rights of some of the most marginalised communities in India. These are people who live by the principles that they advocate and they have influenced many around them in very positive ways, without being overbearing or self-righteous.” Asked about the books and films that she has enjoyed, she said: “Amongst writers and novels I have enjoyed are Elizabeth Gaskell, George Orwell, and Barbara Ehrenreich’s Nickel and Dimed. “Films? Pyaasa, Khosla ka Ghosla!, Apocalypse Now and Local Hero. I loved the myths and literature that we were exposed to in India.” And, now, how did she feel entering the imposing grandeur of the Bank of England in Threadneedle Street? “I think one feels the gravity of the place and the decisions being made as soon as one steps in. It’s daunting and encouraging at the same time.