The Bank of England should press ahead with cutting interest rates next month despite a surprise uptick in inflation, according to a financial services chief.

UK headline inflation rose to 3.6% in June, data from the Office for National Statistics shows: that’s ahead of the 3.4% expected by economists and unchanged from the previous month. Core inflation, which strips out volatile food and energy prices, also ticked higher to 3.7% from 3.5% in May.

But  the chief executive of severe Group, Nigel Green, says the marginal overshoot is no reason for the BoE to delay a rate cut in August.

“There’s no question the latest inflation data will spark some jitters,” he says.

“But one slightly hotter-than-expected reading should not knock the Bank off course. A cut next month is still warranted – and, frankly, necessary. Inflation has fallen considerably from its double-digit peak. What we’re seeing now is the bumpy endgame. The disinflationary trend remains intact, but it was never going to be perfectly smooth.”

Green notes that UK wage growth is softening, job vacancies are falling, and the broader economy remains under pressure from the Bank’s tight policy stance over the past two years.

“The real risk now is overkill” he continues. “With inflation moving in the right direction and the labour market starting to weaken, holding rates too high for too long could do unnecessary damage.”

His comments come just days after BoE Governor Andrew Bailey said rates were “on a downward path” and hinted the Bank would be prepared to move more decisively if labour market slack increases.

Markets are still pricing in a 25-basis point rate cut at the Monetary Policy Committee’s August 6 meeting, which would bring the base rate down from its current 4.25%.

Green says a summer rate cut would offer “timely and targeted support” to households and businesses at a point when economic momentum risks stalling.

“Too many consumers are still feeling the aftershocks of the cost-of-living crisis,” he says. “Mortgage holders are under pressure, and confidence remains fragile. A well-judged rate cut would help to steady the ship. Central banks are meant to look forward, not react to each data print. Waiting for perfect numbers is a mistake. The time to act is when the broad conditions warrant it – and they do.

“The Bank doesn’t target sterling, but it can’t ignore it either. A more competitive currency would help growth at the margins and ease some imported inflation,” he says.

“Caution has its place, but not when it leads to paralysis,” he concludes.