The Chancellor has appointed an ardent critic of Brexit as one of the Bank of England's key policymakers to help determine how to tame the highest inflation in three decades.
Rishi Sunak has picked Dr Swati Dhingra, an associate professor at the London School of Economics, to sit on the Bank’s rate-setting Monetary Policy Committee (MPC) despite criticism in recent years of an anti-Brexit bias on Threadneedle Street.
She will replace Michael Saunders as an external member on the nine-strong rate-setting committee at a crucial moment as the Bank braces for inflation to hit double digits.
The trade specialist has revealed little on her monetary policy stance but is known as a vocal critic of Brexit, amid concerns over a lack of intellectual diversity at the Bank.
Dr Dhingra previously said “from an economic perspective, the best policy would be to cancel Brexit” and called hopes of replacing EU trade through deals elsewhere as “wishful thinking”.
In a paper earlier this year, she called Brexit “the biggest reversal of deep international economic integration in the modern era” and said the vote to leave had “a sizeable negative effect on the UK economy” even before Britain’s departure.
It came as Dr Gerard Lyons, chief economic strategist at Netwealth and Boris Johnson’s ex-chief economic adviser, criticised a lack of intellectual diversity among the Bank’s rate-setters.
"We really need diversity of thought, in terms of membership of the MPC,” he said at an Centre for Policy Studies event.
“Diversity of thought and diversity of background needs to be more centre stage in terms of future committees."
Dr Dhingra will take over from one of the Bank’s most hawkish rate-setters in August, meaning a more dovish stance could edge the MPC away from more aggressive action to tame inflation. Mr Saunders was one of three members to vote for a double interest rate rise at last week’s MPC meeting.
Earlier this year Dr Dhingra expressed fears that the Bank’s rate-setters will fail to bring prices under control by the end of this year, warning there are “too many inflationary pressures and structural problems”.
Dr Dhingra’s appointment will be a step towards addressing the MPC’s gender imbalance. It will be the first time three women have been on the Bank’s MPC since 2005 amid concerns over a lack of diversity at the central bank.
Following the appointment, Sunak said her “experience in international economics will bring valuable new expertise to the MPC”.
Dr Dhingra, who will begin a three-year term on August 9, said: “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.”