Bank of England policymaker Swati Dhingra emphasised the tangible economic drawbacks of postponing interest rate reductions until there is additional evidence indicating a decrease in underlying inflation pressures.
"Waiting for lagging indicators of domestic relative price growth to fall sharply before reducing rates comes with a cost of foregone improvements in living standards and a risk of lowering supply capacity for the future," she said at an event hosted by MNI Connect.
Dhingra voted this month to cut interest rates from their 16-year high of 5.25%, the first member of the BoE's Monetary Policy Committee to do so since early in the Covid -19 pandemic.
Most of the MPC voted to keep rates on hold - and two voted for a further increase - because they were unsure that wage growth and services prices would slow enough for inflation to return sustainably to its 2% target.
The Bank of England projected this month that a decline in energy prices would drive inflation to 2% in the second quarter of this year. However, most members of the Monetary Policy Committee anticipate a return towards 3% by the end of the year as the impact of lower energy prices diminishes.
Dhingra expressed the view that current wage growth rates exceeding 6% might not be significantly distant from levels conducive to 2% inflation, considering that wage growth stood at 4-5% before the global financial crisis.