Interest rates could hit 2 per cent next year, the highest level since 2008, according to a Bank of England official.

The current rate is 1.25 per cent, but Michael Saunders, who will step down from the Bank's rate-setting Monetary Policy Committee (MPC) next month after six years, said such a rise from the current level was not "implausible or unlikely".

The Bank has already raised rates five times since December.

Mr Saunders said several more rises were likely to be necessary to slow the rapid rise in the cost of living.

At an event held by think-tank the Resolution Foundation, Mr Saunders said that recent Bank surveys of experts suggested inflation would rise to around 2 per cent in the next year, according to Mail Online

He said he did not regard such an outcome as implausible or unlikely.

The Bank was torn between doing "too much, too soon versus too little, too late" when tackling the cost of living crisis.

But with inflation at a 40-year high of 9.1 per cent, and set to surge past 11 per cent later this year, Mr Saunders said he felt it was riskier to do "too little, too late".