The economy is heading into recession and interest rates should fall to "well below" their current 5 percent, Bank of England policy-maker David Blanchflower was quoted as saying in a newspaper interview.

The arch-dove was quoted as saying in Monday's edition of the Guardian that the economy would probably shrink for as much as a year and policy-makers had to act now to bring down borrowing costs.

The Bank of England has held interest rates at 5 percent for the last three months after cutting them in April despite signs of a sharply slowing economy because inflation has nearly doubled the central bank's 2 percent target.

Blanchflower was the lone voice calling for a cut in interest rates in May and June. Minutes of this month's meeting will be published on Wednesday, but Blanchflower looks sure to have repeated his call for lower rates.

"I think we are going into recession and we are probably in one right now," Blanchflower told the Guardian. "We will probably have three or four quarters of negative growth, but the risks are to the downside.

"It's not too late to stop it, but we have to act right now. Monetary policy has been far too tight for too long. We can't just sit and do nothing as we have done for too long."

Blanchflower, an academic economist who lives in the United States, told the newspaper that the British economy could be in for a worse ride than even the American economy.

Both countries, he said, were facing the "biggest economic problem since the Great Depression."

He added that "the U.S. has had a big stimulus, but the UK has had none. So the same things that have been happening in the U.S. will happen in the UK, but they could well be worse," he was quoted as saying.

Blanchflower has said house prices in Britain could fall by as much as third. The recent rises in unemployment, he told the newspaper, were just the "tip of the iceberg" as job losses in house building combined with the financial sector and retail.

He said that the Monetary Policy Committee had to consider the medium-term price outlook and that inflation - which hit a series-high of 3.8 percent in June - could fall sharply.

"Our job is to focus on inflation in the medium-term so we have to look through the short-term shock from oil and commodity prices," Blanchflower was quoted as saying.

"The economy is now slowing so fast that we run the risk of writing a letter on the low side in the medium-term."

Under the Bank's remit, the governor has to write an explanatory letter to the government when inflation deviates from the 2 percent target by more than a percentage point.

Governor Mervyn King had to write such a letter for only the second time last month when the May inflation data showed a jump to 3.3 percent.