By Jonathan Davies
A Bank of England policymaker has warned that keeping interest rates low for too long would undermine the UK economy.
Kristin Forbes, who is a member of the Bank's Monetary Policy Committee (MPC), said it would take between one and two years to raise interest rates to the level the bank wanted. She said that, as a result, rates would need to start rising "well before" inflation hits 2%.
Writing in a column for The Telegraph, Ms Forbes said: "Waiting too long would risk undermining the recovery - especially if interest rates then need to be increased faster than the gradual path which we expect."
Her comments have led to economic analysts believing that interest rates could be raised sooner than thought.
Ms Forbes said that keeping interest rates at the record low of 0.5% risks "creating distortions".
But the strength of the pound and low energy prices are keeping inflation near zero, which gives the MPC 'more time'.
"There is no need to act before we are confident that inflation is heading back toward 2% within about two years as expected," she added.
