Interest rate cuts should still be a “way off”, according to a top Bank of England official, as she warned there was a bigger risk of “inflation persistance” in the UK than in other countries. 

Megan Green, a policymaker for the Bank of England, said there had been encouraging news on UK wage growth and services in recent months. However, she suggested that this did not mean interest rate cuts should be imminent. 

It comes after months of mounting hopes that the Bank of England could be poised to cut rates as soon as this summer. Andrew Bailey said last month that interest rate cuts were on the way amid signs of easing inflationary pressures. Kantar figures showed grocery inflation had fallen to its lowest level in two years last month. 

Mr Bailey said it was reasonable to expect two or three cuts this year. 

However, writing in the Financial Times, Ms Green suggested the BoE should be waiting longer to cut rates. 

Ms Green, who is among the more hawkish members of the BoE’s monetary policy committee, said: “The UK economy has faced the double whammy of a very tight labour market and a terms of trade shock from energy prices. Inflation persistence is therefore a greater threat for it than the US. But market pricing for interest rates does not reflect this.”

She said the risk of inflation persistance was “diminishing”, but indicators rmained “higher than in other advanced economies, particularly the US”. 

“Momentum in the markets has been towards pricing in later rate cuts by the Fed as economic growth remains robust. In my view, rate cuts in the UK should still be a way off as well.”

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