With the base rate standing at 4% after last month’s 0.5% increase, Dhingra highlighted the fact that inflation was falling and that any further base rate hikes could increase the pain on the already-squeezed budgets of UK households. The Bank of England is due to announce any moves in the bank rate on 23 March.

On inflation, she said: “Inflation is expected to fall sharply over 2023. We can be sure that this will happen if we do not see further cost increases of magnitudes similar to those that resulted from the war in Ukraine.”

A separate report from the British Chamber of Commerce (BCC) agrees with that assessment. The organisation stated that inflation would continue on its downward path and level out at 5% at the end of this year.

It stated: “The current downward trajectory, following a peak of 11.1% in October 2022, is likely to continue throughout the year, ending at 5% in Q4. The CPI rate is expected to continue to slow and drop below the Bank of England’s target to 1.5% in Q4 2024. It is then expected to rise again in 2025, returning to the 2% goal.

“This means prices will continue to rise, at slower rates, and that they will stabilise at a much higher level than two years ago. Average earnings growth will lag behind inflation until 2024.”

Given falling inflation and the economic risks of raising the bank rate for what would be an eleventh successive time, Dhingra noted that holding steady was the best policy.

She said: “Overtightening (i.e. raising rates sharply) …risks unnecessarily denting output at a time when the economy is weak and deepening the pain for households when budgets are already squeezed through energy and housing costs.

“In my view, a prudent strategy would hold policy steady amidst growing signs external price pressures are easing, and be prepared to respond to developments in price evolution. This would avoid overtightening and return the economy sustainably to our 2% inflation target in the medium-term.”

No consensus on rate rises

However, there are fellow committee members who believe that rates will have to rise again to beat sticky inflation.

Last month, YourMoney.com reported that, Catherine Mann, a senior policymaker at the MPC, believed that there were likely to be further increases.

She said: “[Monetary] tightening…likely is needed to ensure the effectiveness of monetary policy to achieve the objective of two per cent sustainably in the medium term.”

Mann added that any pivot on policy was unlikely given the current economic data, noting that “a preponderance of turning points is not yet in the data”.

She concluded that: “We have an inflation remit, and we will achieve it one way or another. Failing to do enough now risks the worst of both worlds – higher inflation and lower activity – as monetary policy will have to stay tighter for longer to ensure that inflation returns sustainably back to the two per cent target.”

The BCC’s economic report is more in line with Mann than Dhingra, as it, too, notes a rise in the interest rate – although a smaller one than many in the market anticipated.

It stated: “The forecast for the Bank of England’s interest rate has moderated following the big uptick after the mini Budget of September 2022. The rate is now expected to end 2023 at 4.25%, just a quarter of a percentage point higher than the current rate.

“It should then fall to 3.25% by Q4 of 2025, though this is still much higher than the historically low rates, below 1.0%, seen for more than a decade.”