LONDON (Reuters) - Bank of England policymaker Gertjan Vlieghe said a further rise in British interest rates was likely to be needed if the global economic recovery and a pick-up in wages continued to offset headwinds from Brexit.

Pedestrians walk past the Bank of England in the City of London, Britain, May 15, 2014. REUTERS/Luke MacGregor/File Photo

The BoE last week surprised investors when it said interest rates would probably need to rise sooner and by slightly more than it had previously signaled.

Financial markets immediately priced in a 70 percent chance of a rate increase in the next three months, although that likelihood fell back a bit on Monday.

Vlieghe said November’s rate hike by the BoE - its first in more than a decade - was not intended as a one-off reversal of the emergency rate cut made in August 2016 after the Brexit vote, and further increases were likely.

Since the vote to leave the European Union, Britain’s economy has grown more slowly than almost all its peers, but not as weakly as was widely forecast just after the vote. Inflation has risen to its highest in more than five years after the pound’s fall and unemployment is at its lowest rate since 1975.

Vlieghe, who was once considered to be the BoE’s strongest advocate for moving slowly on rate hikes, said rapidly rising consumer borrowing, signs of a pick-up in wages and a robust global economy all helped to make the case for higher rates.

“A further rise in interest rates is likely to be appropriate if all those trends continue and we are on a trajectory. It wasn’t just one hike in November and then we take a very long break,” he said during a discussion about household debt held by the Resolution Foundation think tank.

Several members of the BoE’s Monetary Policy Committee have said they expect rates to rise again since Thursday’s decision by the BoE to leave rates unchanged at 0.5 percent.

BoE Deputy Governor Ben Broadbent said on Friday it would be wrong to rule out two rate rises this year. Chief economist Andy Haldane said there was no rush and rates were unlikely to return to pre-financial crisis levels of around 5 percent.

Vlieghe said that in the medium term, there was a lot of uncertainty about the correct equilibrium level for interest rates in Britain, and that much would depend on the economic impact of Britain’s departure from the EU in March 2019.

The central banker also said the level interest rates needed to reach before the BoE would consider reversing its quantitative easing program may be lower than was thought.

In mid-2016, the BoE said rates would need to reach around 2 percent before it started to sell its 435 billion pounds ($603 billion) of government bonds, in order to give itself 150 basis points of headroom for future rate cuts during a downturn.

Vlieghe said that since 2016, the BoE had found that 0.5 percent was not the effective floor for interest rates, and that it could cut them to close to zero.

“That has given us a little bit more room for maneuver. If you want to (be able to) cut by a percentage point and a half, you don’t need to go all the way to 2 percent.”

A minority of economists think the BoE will raise rates to 1.5 percent over the next two years, bringing the central bank within touching distance of QE reversal.