Bank of England 1

The UK's "economic aircraft appears to be losing speed on the runway", Bank of England chief economist Andrew Haldane has warned.

With speculation over when the Bank will raise interest rates growing as the US Federal Reserve nears its own rate rise, Mr Haldane said that any increase in the UK would "increase unnecessarily the chances of the economy falling below critical velocity".

In a speech to the TUC union, Mr Haldane, who is widely regarded as the most cautious member of the Bank's Monetary Policy Committee, said: "Now more than ever in the UK, policy needs to be poised to move off either foot depending on which way the data break."

Interest rates have been at the record low of 0.5% for more than six-and-a-half years. With unemployment falling and wages rising over the past two years, many economists have called for interest rates to be moved from their record low. The governor of the Bank of England Mark Carney has repeatedly warned that interest rates will only increase gradually, most likely by 0.25 percentage points at a time, when the time does come.

Mr Carney had indicated that the first increase would come early in 2016. But following the Bank of England latest inflation report, it is now more likely to be much later in the year.

Andrew Haldane said: "Against that backdrop [of inflation at 0.1%], my view is that the case for raising interest rates is still some way from being made.

"Whatever the reason, the economic aircraft appears to be losing speed on the runway. That is an awkward, indeed risky, time to be contemplating take-off.

"Meanwhile, inflationary trends do not at present give me sufficient confidence that inflation will be back at target, even two years hence."