According to the Bank of England Catherine Mann, businesses will need to show that they want to cover the price before further reducing interest rates.

Mann said she was warned of companies looking to rebuild profit margins after warning retailers and consumer goods companies to resist pushing up prices more than just rising costs, Mann said she was wary of companies looking to rebuild profit margins after squeezing in recent years.

“I need to see the loss of pricing power, I need to see companies start to get more moderate when setting prices,” she said.

Mann, a former chief economist at the Organization for Economic Cooperation and Development, is one of two policymakers who voted last week to set the interest rate at 4.5%. Most of the five members voted to reduce a quarter to 4.25%, while two voted to reduce a half.

Mann has said she was ready to steeply lower interest rates once she won the battle against inflation.

But she is concerned that rising inflation rates for commodity prices have raised household expectations for price increases in the coming months.

She said that despite the knock-on effect of Donald Trump's tariffs on China and other countries on tariffs on China, import prices could lead to cheap exports being transferred to the UK despite a 90-day truce announced on Monday.

“There will be some trade transfers that will lead to moderate import prices, but there is a lot of profit between the dock and the shelves,” she said. “Commodity price inflation is actually rising, not falling.”

Unions and academic economists accuse large businesses of using their market capabilities to increase prices during the pandemic, even if their costs remain stable or declined. The term “greed” was created to explain how the prices of food and consumer goods continue to rise long after the cost of production fell.

Huw Pill, the bank's chief economist, said earlier this week that he was concerned about changes in the labor market, which meant higher wages would last until 2027.

Last week, a pill that voted with Mann to freeze interest rates said inflation uncertainty would drop if wages continue to be higher.

Mann said of CNBC that the UK's labor market was more than expected, when she voted to lower interest rates.

"The first observation is that the labor market is more resilient. Now, yes, we have some prints that indicate a slowdown in the labor market, but it's not a nonlinear adjustment," she said.

Data released by the UK labour market on Tuesday showed that jobs fell, wage growth fell and vacancy grew, indicating that the labour market continued to weaken.

Some economists say these figures suggest that the pressures of increased taxes and slowing growth have only had a modest impact on workers, leading to fears that prices will last longer.

Goldman Sachs said economic growth is also expected to gain more resilience in the UK and the euro zone, reducing expectations for further interest rates.

Investment banks now expect UK interest rates to drop to 3% in February next February before the Bank of England ceases its cutting cycle, after previously forecast rates to drop to 2.75% by March next year.

The UK inflation rate is expected to reach 3% in April, when figures are published after falling to 2.6% in March next week.

The bank expects inflation to average 3.5% in the third quarter of this year, primarily in response to the increase in utility bills and municipal taxes before dropping back to its 2% target in 2026.