Bank of England policymaker Martin Weale said the bank's capacity to add stimulus is limited by the risk to inflation expectations.
"Failure to damp sufficiently any new shock pushing up on inflation would result in inflation expectations becoming more entrenched," he said in a speech delivered at the British-American Business Council Transatlantic Conference on Friday.
The near stagnation of the past three years is likely to be replaced by a modest growth. In the latest Inflation Report published on Wednesday, the BoE lifted its growth outlook and lowered inflation forecast.
Weale said policymakers should not be "inflation nutters". "The correct thing for policy-makers to do would be to accept a modest degree of entrenchment of raised inflation expectations as a price worth paying for a smoother output path," he added.
The call for more stimulus by outgoing BoE chief Mervyn King and two others over the last three months was overruled by a majority of policymakers as they fear risk to inflation and pound.
"The market signal pointing to low interest rates for some time to come is certainly at present consistent with the way I see the outlook for the economy and the balance of risks affecting inflation and output." Weale said. He concluded that the implied path for the bank rate is consistent with its remit.
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