Timothy Besley, a member of the Bank of England's Monetary Policy Committee, said yesterday that the central bank must not cut base rates until inflationary pressures are brought under control.

Timothy Besley, a member of the Bank of England's Monetary Policy Committee, said yesterday that the central bank must not cut base rates until inflationary pressures are brought under control.

The comments pushed the pound - which was already trading at a 22-month low against a resurgent dollar - down on currency markets.

Besley, the only MPC member to vote for higher interest rates last month, predicted that inflation will start falling towards the Bank's target of 2% next year, aided by a drop in prices for key commodities such as oil, gas and metals.

Besley said keeping inflation on target was "not easy" in the current economic climate. "This spiral has to be nipped in the bud and that means having interest rates at a suitable level until the threat of higher inflation has passed," he said.

"All being well, inflation will fall again next year and will be much closer to the 2% target by the end of 2009. But that will only happen if people don't chase inflationary wage increases."

He added: "Everyone wants to protect their living standard. But if everyone does it, prices will just go up again as businesses try to cover their higher costs. Then we'll all be back to square one, but with inflation still high."

But in the meantime the UK faces a tough year ahead as the full impact of the credit crunch is felt. The Bank's latest inflation report predicts the economy spluttering to a halt over the next few months, while Governor Mervyn King said there "was bound to be a quarter or two" of negative growth.

The market responded to Besley's remarks by selling the pound, because, if rates are cut next year as Besley's comment suggests is likely, investments in the currency will become less profitable.

The pound ended the day at $1.8648 compared to $1.8659 at the previous close. The euro bought 79.04p compared to 78.90p at the previous close.

The euro was lifted by the ZEW index, which records investors' six-month expectations for the German economy.

The index rose to negative 55.5 points in August from a 16-year low of negative 63.9 points in July, beating forecasts. Germany is the eurozone's largest economy.

Besley's statement suggests he is in no hurry to change his hardline stance despite forecasts from the Bank last week showing inflation should fall below the target level in two years' time if the cost of borrowing is kept at 5%.

City economists expect another split when the minutes of this month's rate meeting are published today.

They believe the minutes will show Besley voting again for higher rates, while arch dove David Blanchflower will have opted for a cut and the remaining seven MPC members will have voted to keep rates steady.

Inflation is currently running at an annual rate of 4.4% - the highest since the Bank was given the power to set borrowing costs in 1997 - but is expected to cool as demand slows and commodity prices stabilise.

Crude oil, for example, has fallen by more than 20% since climbing to record levels above $147 a barrel in July. Prices for metals such as gold and copper have also fallen in recent days.

A survey published yesterday showed Britons' expectations for future inflation rose to the highest in 16 years, threatening the Bank of England's credibility as it tries to control the fastest price gains in a decade.

Consumers predicted that the inflation rate will be 4.8% in two years, the highest since the first quarter of 1992, a survey by GfK NOP for Barclays Capital showed. Only 13% of respondents expect inflation to be at or below 3% in two years.

Meanwhile, analysts at Capital Economics said the British economy was reaching a "tipping point" and heading toward recession.

Capital's economics team wrote: "It would be unprecedented for the UK economy to experience a year of "broadly flat output" like the MPC expects. Economies don't stagnate - they either bounce back quickly or contract outright.

"We think that the latter is the most likely scenario this time and continue to think that the UK will soon fall into recession, if it hasn't entered one already."