Thomas Wells, manager of the S&W Global Inflation-Linked Bond fund, said inflation is likely to remain high this year: "CPI inflation remains elevated and we would expect this to remain the case for the remainder of 2017". However, the headline inflation move was not matched in the RPI, with the annual rate here holding at 3.9 percent in September, slightly weaker than consensus expectations.
Facing questions from the Treasury Select Committee in Westminster on Tuesday morning, when inflation was confirmed to have surged to 3%, Dave Ramsden said he was not part of the majority of MPC members who believe a rate hike is likely to be needed "in the coming months" as he suggested inflation pressures will begin to ease.
If it had risen any further, Bank of England Governor Mark Carney would have to write to Treasury chief Philip Hammond explaining why inflation is more than a percentage point above the 2% target and what he and his colleagues at the central bank were going to do about it.
Sterling dropped 0.41 percent to $ 1.3167.
But the governor also said that the Bank had been right to cut interest rates in the aftermath of the Brexit vote, as this had "supported the adjustment in the economy".
"Not raising rates now, having led the markets up the garden path on several occasions over the years would be as equally damaging to the banks credibility".
The expected rise in rates comes despite signs that the British economy is faltering - it is growing slower than any other Group of Seven industrial economy this year - and that inflation is expected to ease back down in coming months. "For many, this has increased dependency on credit, but with defaults now on the rise it is clear that many families are finding it nigh on impossible to balance the books". "This would not be the first time the Bank has talked the talk without walking the walk however, so it is probably best not to count those chickens until they are hatched".
Carney added that a "material change in political circumstances", perhaps such as a Brexit no-deal, could change the Bank of England's forecasts for the United Kingdom economy.
"The deciding factor could be the pound, but even here the outlook has become more benign, with the currency appreciating substantially off lows and acting as a dampener on inflation".
Meanwhile, the pound fell to a three-day low level from the green area after the negotiating head of the European Union said the Brexit negotiations were over.