Bank of England deputy governor Sir Dave Ramsden backed more interest rate hikes on Thursday but said he would consider cutting rates if the economy and inflation pressures panned out differently to his expectation.
His comments come after the Bank's chief economist also said this week that more rate rises might be necessary due to the UK's shortage of workers.
In a speech titled “That was the year that was”, Ramsden became the latest member of the Monetary Policy Committee to mention the possibility of cutting Bank Rate at some point, after the BoE earlier this month said market expectations for interest rates north of 5% were too high.
"Although my bias is towards further tightening, if the economy develops differently to my expectation and persistence in inflation stops being a concern, then I would consider the case for reducing Bank Rate, as appropriate." Ramsden said at King's College London.
But Ramsden also said he would "continue to respond forcefully" if inflation pressures proved to be more persistent than expected.
Ramsden also suggested some of the Bank’s economic forecasts were too pessimistic.
He said big changes to the economy following the pandemic, including a notable decline in the size of Britain's workforce, meant it could no longer rely on old economic models to predict the future.
While he expected an uptick in the jobless rate from the current rate of 3.6% he said he was "materially less confident" about the Bank's prediction for around half a million more people out of work by the end of next year.