A senior policymaker is urging the Bank of England to “stop squeezing living standards” and cut interest rates.

Swati Dhingra, a member of the central bank’s monetary policy committee (MPC), said official borrowing costs should be reduced at its next meeting on 1 August to ease pressure on households and businesses.

“Now is the time to start normalising [interest rates], so that we can then finally stop squeezing living standards the way we have been to try and get inflation down,” Dhingra told the Rest is Money podcast. “We are weighing on living standards and that cost does not need to be paid.”

City investors are currently pricing in a 50/50 chance of a cut from the current level of 5.25%.

Households’ hopes for a cut received a setback last week when the Bank’s chief economist, Huw Pill, warned that key measures of inflation remained “uncomfortably high”. Jonathan Haskell, another member of the MPC, said last week that he favoured keeping rates unchanged.

Dhingra has been a consistent advocate of cutting interest rates since first casting a vote to reduce official borrowing costs in February.

She highlighted the fact that inflation had fallen sharply and was on track to moderate further in the coming months. The consumer prices index (CPI) eased to 2% in May, down from 2.3% in April, hitting the Bank’s target.

“We still think there is more to come in terms of deflationary forces, including if you look at non-energy services which is what people have been concerned about,” she said.