The risk of high inflation is “rising fast”, according to the Bank of England’s chief economist.

Consumer price inflation hit a two-year high of 2.1% in the year to May, with the Monetary Policy Committee expecting a rise above 3%, temporarily.

However, Andy Haldane, who is leaving the Bank after 32 years, has warned the rise may not be “transitory”, the BBC reports.

“Overall, inflation expectations and monetary policy credibility feel more fragile at present than at any time since inflation-targeting was introduced in 1992,” Haldane said in a speech to the Institute of Government.

“By the end of this year, I expect UK inflation to be nearer 4% than 3%”, he said, adding that “everyone would lose” with this outcome.

Mr Haldane said that if he was right, the Bank might need to react with bigger interest rate rises than currently foreseen.

He added: “Even if this scenario is a risk rather than a central view, it is a risk that is rising fast and which is best managed ex-ante rather than responded to ex-post.

“If this risk were to be realised, everyone would lose – central banks with missed mandates needing to execute an economic handbrake turn, businesses and households facing a higher cost of borrowing and living, and governments facing rising debt-servicing costs.”

Last week, the MPC voted to keep interest rates steady at 0.1%.