Bank of England Deputy Governor Jon Cunliffe said on Monday that the central bank may not need to take sustained action to prevent inflation expectations from becoming engrained in public thinking, as there were few signs of this to date.
Cunliffe, the only BoE policymaker to vote against the central bank's March 16 decision to raise Bank Rate to 0.75% from 0.5%, warned against comparisons with 1970s when a self-reinforcing spiral of inflation and expectations took hold.
Cunliffe said he recognised the risk of second-round effects, and that further tightening of monetary policy might be necessary. But he stressed that companies and workers did not have the same pricing power as 50 years ago, a crucial difference.
"I do not think we are yet seeing a psychology of persistently higher inflation emerge," Cunliffe said in a speech to University of London's European Economics and Financial Centre.
"I am not at present convinced that we will inevitably have to lean heavily and constantly against an embedding of an inflationary psychology."
Consumer price inflation hit a 30-year high of 6.2% in February and the government's budget watchdog two weeks ago forecast it would go close to 9% in late 2022, contributing to the biggest fall in living standards since at least the 1950s.
Cunliffe said the Monetary Policy Committee would instead need to judge both upward and downward risks to inflation and growth, and to use its tools "carefully and flexibly".