According to reports by The Telegraph, Julius, who was a member of the Bank’s monetary policy committee from 1997 to 2001, said Hammas’ attack on Israel and ensuing tensions in the Middle East could contribute to a new round of energy price rises, which could therefore prompt a new inflation shock.

‘Stronger than expected’ US jobs market shakes faith in imminent rates cuts

Julius explained this would put pressure on the central bank to increase rates rather than cut them this year.

“I do not think the Bank will be able [to lower rates] because I do not think inflation will come down much further or much faster. I think we are stuck with a fairly sticky inflation situation,” she said.

“Wages are just too strong. The labour market is too tight.”

She added: “When you get the kind of high wage increases that we have seen, it affects the whole services sector, and that is a much bigger sector than the goods sector in our economy.”

Julius’ bearish rates outlook goes against the wider hopes that the BoE will be looking to make its first interest rate cut since the pandemic after inflation fell to a two-year low of 3.9% in November and the bank followed suit and held rates at 5.25%.

But while UK business leaders have called for rate cuts in 2024 the current MPC members have consistently reiterated that now may be too soon to cut rates, including the governor of the Bank of the England Andrew Bailey.