He said: “As resurgent demand bumped up against constrained supply, it struck me as more likely than not that we’d see something the like of which we haven’t seen for several decades.
“I’m really the wrong person to ask about why they got it wrong.”
Mr Haldane, now chief executive of the Royal Society for Arts, Manufactures and Commerce, said that inflation would have surged above the Bank’s 2pc target “come what may” but he believes that early action might have eased the inflationary pressures.
He said: “I wouldn’t have voted for a tightening if I hadn’t thought there was an alternative path for monetary policy that may have done something to dampen down those inflationary pressures to some degree, if not entirely.”
It came as Bank of England Governor Andrew Bailey warned of a “very sharp slowdown” and “hardship” for millions of families on Thursday as the Monetary Policy Committee voted to lift interest rates to 1pc to cool price pressures.
The Bank predicted inflation will surge above 10pc by the end of the year, its highest level in 40 years, while the economy slams into reverse.
Prices were already rising rapidly going into 2022 but fresh supply chain disruptions in China and Russia’s invasion of Ukraine have worsened the problem, pushing up food and energy costs.
Mr Haldane predicted that inflation could run above the Bank of England’s target for years as price pressures will “prove more persistent” than currently expected.
He said: “It’s probably one of, if not the stickiest situation, that’s faced my former institution, the Bank, since I think probably independence in ’97.
“What we’re seeing is to some extent the reversal of the trends we’ve seen over the preceding three or four decades.
“We were seeing global supply chains widen and deepen [and] economies opening up and integrating, cheaping the cost of both goods and services for people and therefore lowering if you like the global level of prices.”
The cost of living crisis is expected to weigh heavily on the economy as households tighten their belts. The Bank’s economists warned on Thursday that the economy will contract in the fourth quarter of this year in a gloomy set of new forecasts.
The Bank of England declined to comment.
“This might be the first generation since the Industrial Revolution who aren’t better off than their parents”
One economist could see Britain’s cost-of-living crisis brewing on the horizon long before others woke up to the threat.
Andy Haldane sounded the alarm in February 2021, four months before stepping down as the Bank of England’s chief economist, comparing inflation to a dangerous tiger. A few months later, he voted to scale back stimulus.
He became a lone dissenter warning of surging price pressures on the Bank’s rate-setting Monetary Policy Committee (MPC). But, since leaving Threadneedle Street, he has been vindicated by the highest inflation in 30 years.
“It was a ‘stitch in time saves nine’ argument basically,” says Haldane, the new chief executive of the Royal Society for Arts, Manufactures and Commerce (RSA) where he plans to tackle more of the economy’s greatest challenges.
“I wouldn’t have voted for tightening if I hadn’t thought there was an alternative path for monetary policy, that may have done something to dampen down those inflationary pressures to some degree – if not entirely,” he says.
“There would have been an overshoot come what may, given the events that played out.”
With inflation set to breach the 9pc mark in the coming months, it now seems baffling that Haldane’s warnings were ignored, not least at the Bank itself.
After he voted to scale back stimulus in May 2021it took another seven months before a majority of the MPC backed tightening monetary policy by raising interest rates.
“In some ways, I’m really the wrong person to ask about why they got it wrong,” says Haldane, who believes early action could have lessened the need for more aggressive rate increases later.
“Regrettably I was right about the inflation impetus. As resurgent demand bumped up against constrained supply, it struck me as more likely than not that we’d see something the likes of which we haven’t seen for several decades.”
After more than 30 years at the Bank and seven as its chief economist and on the MPC, Haldane, now 54, left Threadneedle Street last summer.