Bank of England's chief economist flags chance of interest rate cut

* BoE's Haldane says rate cut as likely as rise

* Sterling falls to day's low on remarks

* Haldane's views unlikely to be shared by MPC (KOSDAQ: 050540.KQ - news) , economist says (Adds market reaction, detail from speech)

By David Milliken

LONDON, March 19 (Reuters) - The Bank of England should consider cutting interest rates if inflation threatens to fall further below target than forecast, its chief economist said on Thursday in remarks distancing him from other BoE officials.

Sterling hit the day's low against the dollar after Andy Haldane's comments, which mark the first time a BoE policymaker has said plunging inflation makes a cut in rates more than a theoretical possibility.

Last week Governor Mark Carney said it would be "extremely foolish" to loosen policy in the face of lower oil prices which have taken inflation to a record low of 0.3 percent.

But Haldane said there was a risk inflation could fail to return to the bank's 2 percent target as forecast. Falling unemployment might lead to smaller wage rises than in the past, and people might think low inflation would continue for a long time.

Sterling's recent rise to a six-year high on a trade-weighted basis could also have a persistent downward effect on prices, Haldane added

"Given the asymmetry of inflation risks, I think the chances of a rate rise or cut are broadly evenly balanced," Haldane said in a speech to businesses in central England.

"In other words, my view would be that policy may need to move off either foot in the immediate period ahead."

The majority view among British economists is that even if inflation briefly turns negative this year, entrenched deflation is far less likely than in the euro zone.

Assuming steady growth and a pick-up in wages, economists polled by Reuters earlier this month forecast that the BoE would start to raise rates from their record low 0.5 percent in around a year's time.

"An interest rate cut by the Bank of England still looks highly unlikely as (Haldane).. looks to be pretty isolated in his views -- at least for now," said Howard Archer, chief UK economist at IHS Global Insight.

Haldane, who leads the BoE's economic forecasting process, said his speech reflected personal views rather than a new official position or emerging consensus from the BoE, adding there was no case for an immediate policy change.

Minutes of the MPC's February meeting showed one unnamed policymaker, presumably Haldane, thought that the BoE was as likely to cut rates as to increase them in the near term.

March's minutes, published on Wednesday, did not address this point.

Nonetheless, Haldane's comments caused 10-year gilt yields to fall to a six-week low, while short-sterling futures priced in slightly lower interest rates . (Reporting by David Milliken; Editing by Mark Heinrich and John Stonestreet)