MNI BRIEF: UK Not A Services Inflation Outlier - BOE Dhingra
MNI (LONDON) - UK services inflation was driven very sharply higher primarily by energy and import price shocks, but is now looking increasingly normal as the shocks fade, Bank of England Monetary Policy Committee member Swati Dhingra told a BOE Watchers conference in London Monday..
Dhingra said a key question for policymakers was how long it would take for the effect of the shocks to fully wear off but that the UK was no longer an inflation outlier, adding the UK was "starting to look very much in the middle of the pack as far as most advanced economies are concerned." (See MNI INTERVIEW: Supercore Shows Benign UK Disinflation Feasible)
She said that there has been "a slight slowdown" in services disinflation and that "there's some way to go in terms of how quickly services inflation normalizes" but this slowdown seems to have beem driven largely by erratics. Dhingra moved ahead of her MPC colleagues in advocating policy easing and voted with the majority for a 25 bps cut at the November meeting but she said that geopolitical events do "pose serious risks if there is another ... substantial escalation that ends up translating into a bigger energy shock."