MPC member makes plea for a gradual increase in interest rates

Mr Sentance, who last month became the first member of the Monetary Policy Committee to vote for a rate hike since August 2008, said the path to economic recovery could be uneven but that did not equate to a risk of a double-dip recession.

"I favour a gradual rise in Bank Rate which would be aimed to avoid destabilising confidence through a sudden lurch in policy," Mr Sentance told a business audience in Reading.

"'Tightening' may be technically correct as the opposite of 'loosening' but it implies that monetary policy might become objectively tight and restrain the growth of the economy significantly.

"Again, that is not my view about the policy stance we currently need."

One factor feeding into a recent spike in inflation was a weak pound, Mr Sentance said, and there was reason to believe that ultra loose monetary policy and the expectation that rates would remain at a record low of 0.5 per cent for some time had contributed to that.

Official data showed inflation eased to 3.2 per cent in June as expected by economists, but that remains well above the Bank's two per cent target.

The Bank expects inflation to continue to subside.

Mr Sentance said the downside risks to the economy and inflation that had forced the Bank to drastically loosen policy had been avoided.

"A year ago, the predominant worry was that inflation could be significantly depressed by the impact of the recession.

"That risk did not materialise," he said.

"And while I'm not yet worried that we face a major and serious risk in the opposite direction, I do think we need to adjust the policy settings we put in place."