Hopes of an imminent interest-rate cut are fading as a key "swing voter" on the Bank of England's rate-setting committee voices ongoing fears over inflation.

Kate Barker, a member of the Bank's Monetary Policy Committee (MPC), dampened expectations in a speech to business leaders in Wilmslow, Cheshire.

"At present, I remain somewhat concerned about the possibility of more persistent higher inflation, even as growth slows," she said.

Her comments will be scrutinised by economists because she has voted with the MPC's majority to keep interest rates unchanged at 5% since April. She is one of five members occupying the middle ground between the "hawks" and "doves" on the nine-strong committee.

The MPC has been hampered by official inflation currently at 4.7% - more than double the committee's 2% target - due to rising energy, food and oil costs.

Many economists are pencilling in a rate cut to 4.75% in November, but Ms Barker warned that inflation expectations and perceptions "have clearly moved higher" during the year.

As financial turmoil increases the risk to the economy, she said, it is "not easy to form a clear view" about how restrictive holding rates at 5% would be.

Despite muted wage demands as unemployment fears grow, she said it is "too soon to dismiss completely" concerns that a round of higher pay settlements could fuel inflation next year.

"Concern over the risk that higher inflation could become embedded is justified. Were monetary policy to be insufficiently restrictive, and allow this risk to become reality, this would produce one of the worst possible outcomes," she said.

Her warnings come a day after fellow MPC member Andrew Sentance said policymakers should not over-react despite a week when financial markets went "to hell and back".

Dr Sentance - who is one of the more hard-line members of the nine-strong committee - told a business audience in Leicester that the MPC needed to make "a broader assessment" of the impact of the turbulence on the wider economy.

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