LONDON, Jan 25 (Reuters) - Bank of England Monetary Policy Committee member David Blanchflower was quoted on Sunday as saying interest rates still had a way to go if they are to follow the United States, where rates are close to zero.
Speaking by videolink from New Hampshire, he told The Times that: "Obviously we have cut a lot, but we are still a long way from 25 basis points as in the U.S."
UK rates are currently at a record low of 1.5 percent as the central bank tries to stimulate the economy and prevent a deep recession.
"I don't think the interest-rate weapon is defunct; we still have an inflation target; we are obviously approaching zero rates," he added.
"Would you prefer to have 5 percent interest rates now, or where they are? But we've had to play catch-up and that's not what I would have liked," he said.
Blanchflower was the only member of the MPC to have voted for a cut of 100 basis points at its January meeting, minutes showed. The other members voted for 50 basis points.
But he said the central bank should have acted quicker in the past to prevent the housing market overheating by raising interest rates ahead of the economic downturn.
"It certainly appears that the housing market was a bubble and that rates should have been raised earlier than we did, and cut much sooner when the housing market turned," he was quoted as saying.
With unemployment rising to nearly two million in Britain, Blanchflower said the figure could reach three million, or higher.
"We're at 1.92 million now. It would be hard to think we would not get to 3 million, perhaps in a year's time. If you take the experience of previous recessions, 3 million might be optimistic," he was reported saying.
He saw falling inflation, despite the threat of deflation, helping the recovery.
"As inflation falls that means real wages improve," he said.
"Economies do recover when positive real wage growth starts to kick in.
"We saw that at Christmas to an extent -- people started to respond to lower prices."
Britain went into recession at the end of last year for the first time since 1991, data confirmed on Friday, showing the economy shrinking by 1.5 percent in the final quarter of 2008, the biggest contraction since 1980.
But Blanchflower was optimistic a recovery was in sight.
"The sense I have is of renewed optimism," he was quoted as saying.
"Part of it is that oil and gas prices have come down but there is also a feeling that the turn has come. I know there are difficulties in the banking sector and in the markets but people feel . . . there will be an Obama effect. And if we have a turnround in America, that will feed over to Britain."
(Reporting by Avril Ormsby; Editing by Tomasz Janowski)