OREANDA-NEWS. March 20, 2015. The Bank of England should be ready to cut interest rates to a record low if needed to stop inflation falling further than expected below target, the central bank's chief economist said on Thursday.

Andy Haldane's views may come as a surprise to many BoE watchers. Last month the bank Monetary Policy Committee's policy minutes reported that one unnamed policymaker shared this view.

But Governor Mark Carney subsequently dismissed the case for a cut in rates in response to tumbling oil prices, and minutes of March's policy meeting released on Wednesday made no explicit mention of this stance.

Haldane -- in remarks which he said represented his own view, rather than that of the MPC as a whole -- said the next move by the BoE was as likely to be a cut in rates as a hike.

"Inflation has dropped like a stone over the past year, to close to zero," he said in a speech to businesses in central England, adding that the risk was that it would fall even more than the BoE forecast last month.

"I think the chances of a rate rise or cut are broadly evenly balanced. In other words, my view would be that policy may need to move off either foot in the immediate period ahead, depending on which way risks break," he said.

Haldane said there was no immediate case to change rates, and Wednesday's minutes showed that all policymakers expected interest rates to rise over the next three years.

But he said there was downward pressure on inflation due to factors that went beyond the recent drop in oil prices. Consumer price inflation hit a record low of 0.3 percent in January, far below the BoE's 2 percent target.

The BoE forecast last month that inflation was likely to dip into negative territory in the coming months, before returning to its 2 percent target in the next couple of years as strong consumer demand was expected to support prices.

Economists polled by Reuters expect the next move by the BoE to be a rise in interest rates in around a year's time.