Sentence, who has voted for a rise in the base rate to 0.75% at the last three MPC meetings, said he did not believe that current economic conditions justified continuing to hold the interest rate at its historically low level.
Speaking at a CBI and Bank of England lunch in Northern Ireland, Sentance said: “The longer we keep interest rates at an exceptionally low level, the greater is the risk that Bank rate would need to rise sharply in the future creating a serious setback to business and consumer confidence.
“We should seek to avoid such a sudden lurch in policy. A gradual transition to higher interest rates appears much more likely to provide a stable and predictable approach to policy-making which enables the business community to plan sensibly for the future.”
He said that there were three “powerful arguments” for a gradual rise in interest rates that have been evident in recent months.
These are: that the UK economy should be able to stand it owing to the recovery in overseas markets and domestic private sector spending; that higher interest rates will act as a brake on inflation; and the fact that any increase will start from an extremely low level.
Sentence said: “The main elements of demand for UK businesses, overseas markets and domestic private sector spending, have been recovering for over a year now and look set to continue to grow.
“The outlook for growth suggests the UK economy should be able to withstand a gradual rise in interest rates, even taking into account the impact of fiscal consolidation.”
He continued that higher interest rates would exert a brake on above-target inflation and keep inflation expectations anchored to around the 2% target.
In addition, Sentance said that raising Bank rate sooner rather than later will provide protection against the upward pressures being exerted on it by strong global growth and potential wage growth as recovery proceeds.
He added: “With inflation significantly above target and set to go higher, such a policy would reinforce the credibility of the MPC’s commitment to stable prices – helping to keep inflation expectations in line with the 2% target.
“It should also help build confidence that the Bank of England is “on the case” in terms of its remit, taking appropriate policy action to return inflation to target rather than appearing to just hope for the best.”
Sentance continued: “The third important argument is the extremely low level of interest rates we are starting from. Taken together with the monetary stimulus from Quantitative Easing, there is still likely to be a considerable support for growth from monetary policy even if interest rates are raised somewhat from their current level.”
He said it was highly unusual for the official interest to be held without change for so long and he did not believe that the current economic conditions justified continuing this policy.
