A rate setter at the Bank of England has warned that inflation pressures are “uncomfortably high” and that if the central bank fails to contain them, it will be “very expensive” for the UK economy.

Speaking at the Resolution Foundation think tank in London on Monday, Michael Sanders, one of four outside members of the Bank of England’s monetary policy committee, said he wanted monetary policy to stop stimulating economic activity.

After voting for a 0.5 percentage point hike last week, Sanders said he believed the Bank of England’s main interest rate should be raised “relatively quickly toward a more neutral stance to prevent the recent trend of rising inflation expectations and rising pay growth from becoming more firmly established. Embed”.

A majority on the committee voted to increase the 25 percentage points to 1 percent.

Sanders declined to clearly define his view of a neutral rate, where borrowing costs neither stimulate nor dampen economic activity. But he said it could be between 1.25% and 2.5%.

He noted that financial markets do not expect CPI inflation to fall back to 2% if rates are in that range.

Sanders did not follow BoE Governor Andrew Bailey’s rhetoric of a “finely tuned” response to high inflation, preferring instead to stress that too little has been done to contain inflationary pressures in the UK economy risk.

He pointed to spending holding up well and businesses expecting significant price hikes in the coming months, with prices for domestic core services rising almost twice as fast as the Bank of England’s 2% inflation target.

Sanders added that, unfortunately, the UK economy has a more limited capacity to deal with high levels of spending, with long-term illness rates rising sharply since the start of the pandemic and supply frictions caused by Brexit.

“We should strongly oppose . . . risk [of inflation being persistently too high]because if it materializes – not a negligible risk in my opinion – then the process of re-anchoring price expectations [to the 2 per cent inflation target] From an economic standpoint, that can be very expensive,” Sanders said.

He said the MPC “could quickly reassess” the stance of monetary policy if the economy performed worse and inflationary pressures subsided.

If the BoE does too little now, the most likely reason for interest rates to rise to an area where policymakers are actively seeking to cut spending and raise unemployment is. In that case, Sanders said, the onus is on later to squeeze inflation out of the economy.

“I’d rather not be in that situation,” he added.

Sanders’ hawkish remarks came as Andy Haldane, the former chief economist of the Bank of England, now at the Royal Society of Arts, took to television to criticize his former colleagues for being too slow in tackling inflation.

“this [inflationary period] It won’t come and go in a few months. I think it’s probably years, not months,” Haldane told LBC radio on Monday, adding that the inflation outlook was moving “closer” to 1970s levels.

Haldane added: “Now, to be clear, hitting the brakes sooner won’t completely avoid the cost-of-living crisis we’re facing. It’s with us anyway, but I hope we do a little more Tighten things up.”