July 17 (Bloomberg) -- Bank of England policy maker Andrew Sentance said he's been ``particularly struck'' by the jump in inflation, which risks stoking price expectations, and he considered voting for higher interest rates last month.

``I have been particularly struck by the speed with which inflation has moved to somewhere that is significantly above target,'' said Sentance in an interview in his office in London today. ``There are clear risks to inflation expectations in this environment.''

Sentance, 49, and the Bank of England's eight other rate- setters are fighting the U.K.'s worst bout of inflation in more than a decade while trying to keep the economy clear of a recession. The former British Airways Plc chief economist indicated that for now, the inflation outlook is changing more quickly than the one for growth.

``It's not clear that the slowdown in the economy that has emerged so far is significantly sharper than we were projecting in the May inflation report,'' Sentance said. ``We may have to accept that the economy slows further, that we've got a few more difficult quarters in the real economy'' to get inflation back to the central bank's 2 percent target.

Inflation Jump

Inflation accelerated to 3.8 percent in June, the fastest pace in at least 11 years, spurred by higher energy and food costs, the Office for National Statistics said on July 15.

Investors added to bets for higher interest rates after Sentance's comments. The implied yield on the rate futures contract for December rose 3 basis points to 5.89 percent as of 5:02 p.m. in London.

``The Monetary Policy Committee's chief hawk is doing what hawks do,'' Alan Clarke, an economist at BNP Paribas SA in London, wrote in a note to investors. Sentance's view ``highlights that it is too soon to rule out a rate hike in the U.K.''

Policy makers kept the U.K. benchmark interest rate unchanged at 5 percent for a third month on July 10. Minutes showing how Sentance and the other policy makers voted at that meeting will be released on July 23. The Monetary Policy Committee's next decision is on August 7.

Sentance said he considered seeking a rate increase at the June meeting. At least four others told lawmakers last month that they had also looked at the case for higher interest rates. At that meeting, the panel voted 8-1 for no change, defeating David Blanchflower's call for a cut.

`Upward Pressure'

``We're facing quite considerable upward pressure on inflation and the traditional response would be: `Well, do we need a policy tightening?''' Sentance said, referring to his decision on how to vote in June. ```And if we need to tighten policy, should we be doing it sooner rather than later?'''

Faster price increases and the worst housing-market slump since the last recession have eroded consumers' living standards and helped push support for Prime Minister Gordon Brown's ruling Labour Party close to the lowest since World War II.

Economic growth will slow to a 1 percent annual pace in the first quarter of 2009, the weakest since 1992, the Bank of England predicted in its May 14 inflation report. Economic growth Central bank Governor Mervyn King said then that there may be ``an odd quarter or two of negative growth.''

Sentance said today that a recession isn't the bank's ``central forecast.'' It will be ``very difficult'' to avoid a significant slowdown in the economy, he said.

Growth Forecast

Economic growth of about 1.3 percent for 2009 is a ``reasonable summary of my assessment at the moment,'' Sentance said. ``But to get the full assessment, you'll have to wait for the next inflation report'' with the bank's economic forecasts on August 13, he said.

The inflation rate has exceeded the central bank's 2 percent target for nine months, and breached the government's 3 percent limit in June for only the third time since the Bank of England's independence more than a decade ago.

``Inflation is rising in the short term. We need to get on top of that,'' Sentance said. ``A slowing economy is part of that process because if the economy wasn't slowing there would be increased inflation risks. The balance of risks has shifted quite a bit over the past few months and may indeed continue to shift.''

Since Sentance joined the committee in October 2006, he and Timothy Besley have both made more votes than anyone else to raise the benchmark interest rate. In 21 meetings before the July decision, Sentance voted eight times for a rate increase, 11 times for no change and twice for a cut.

To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net; Brian Swint in London at bswint@bloomberg.net.

Last Updated: July 17, 2008 12:21 EDT