"(High inflation) is a bigger risk than over-tightening," he added. Economists polled by Reuters expect the BoE to raise rates by a further quarter point on May 11 to 4.5%, in what would be its 12th consecutive rate rise since starting to increase interest rates in December 2021. However, in recent months two members of the BoE's Monetary Policy Committee have voted against further rate rises, arguing that the economy has yet to feel much of the impact of past increases.
Ramsden said he was concerned that seven months of double-digit inflation risked embedding longer-term expectations of high inflation among businesses and the public, which could lead to more persistent inflation.
"We need to make sure that an inflationary mentality doesn't develop in the economy as we've seen in previous periods," he said.
Ramsden, who is responsible for financial markets and banking, said the BoE remained "very vigilant" about market risks after the collapse of Silicon Valley Bank and Credit Suisse.
Echoing comments from Governor Andrew Bailey, he also said that it was important for the BoE to look at Britain's system of deposit insurance.
"It's really important that we learn the lessons of the
last few weeks," he said.
"When something goes wrong, someone has to pay for it. And then the question is how much do you pay for it up front by funding deposit insurance, and who does that funding."
(Reporting by David Milliken, editing by Deepa Babington)
