LONDON Sun Feb 15, 2015 4:29am EST

The Bank of England will need to start raising interest rates sooner than investors expect as inflation recovers from current low levels, Martin Weale, a policymaker at the central bank, said.

Weale, one of two BoE's rate-setters who voted for an increase in borrowing costs last year, said the Bank expected inflation to rise above its target of 2 percent by mid-2017 and it would need to raise rates gradually in response.

"In my own view, rates will also have to rise somewhat earlier than market participants currently expect," he wrote in an article published in the Observer newspaper.

The BoE has kept rates at a record low of 0.5 percent since the financial crisis six years ago. Investors think rates could stay there for another year due to low inflation, even as the economy heads for its strongest growth in nearly a decade.

Weale said he had stopped voting for a rate increase in January because a plunge in oil prices might lead to expectations of low inflation becoming built in.

December's inflation rate of 0.5 percent was the lowest in more than 14 years. It could fall again in data due on Tuesday.

Weale said the risks of inflation rising more quickly than expected or becoming entrenched at a low level were “finely balanced.”

If it needed to fend off the risk of deflation, the BoE could revive its government bond-buying program, Weale said, saying his research showed it remained effective.

Also reiterating policy options that the Bank spelled out last week, Weale said a further interest rate cut was possible. The Bank might could again provide guidance on how rates were likely to stay low for even longer "although the effects of such an approach are particularly uncertain," he said.

Weale was the only BoE rate-setter who did not back the introduction of "forward guidance" in 2013 shortly after Mark Carney took over as governor.