The Bank of England’s departing chief economist has said that “everyone would lose” from greater inflation as he warned it could be “nearer to 4% than 3%” by the end of the year.

In a speech to the Institute of Government, Andy Haldane said the risk of high inflation levels “is rising fast”.

Last month, the UK saw Consumer Price Index (CPI) inflation rise to 2.1%, ahead of analyst forecasts and striding past the central bank’s 2% target rate.

In the US inflation has surged to 4.2% – the highest rate since 2008 – stoking speculation of a shift in monetary policy.

Mr Haldane, who will leave the Bank of England after 32 years, said there are still no signs that inflation levels will be “significantly de-anchored” from the 2% target rate but warned that the current situation is delicately balanced.

He said: “Overall, inflation expectations and monetary policy credibility feel more fragile at present than at any time since inflation-targeting was introduced in 1992.

“By the end of this year, I expect UK inflation to be nearer 4% than 3%.”

The Bank’s consensus forecast this month was that inflation is likely to hit 3% this year before retreating by 2022.

Mr Haldane warned that this high level of inflation would “leave monetary policy needing to play catch-up to re-anchor inflation expectations” through larger or faster interest rate rises than currently expected.

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 hand-brake turn, businesses and households facing a higher cost of borrowing and living, and governments facing rising debt-servicing costs.”