Adds quotes, background

LONDON, June 23 (Reuters) - Bank of England policymaker Alan Taylor said on Tuesday that an "extended hold" for interest rates was the right response to the increase in price pressures spurred by conflict in the Middle East.

Taylor, an external member of the Monetary Policy Committee, said he doubted a new cycle of wage and price inflation could be reignited by the current "benign" financial market pricing for interest rates and energy.

He also described Britain's economy as "very weak" before the outbreak of war.

But Taylor, an academic economist who favoured cuts to interest rates before the Iran war, emphasised the lack of clarity around the economic outlook, and whether peace would hold in the Middle East.

"Until we have greater certainty, then, an extended hold at this level is, to me, very much the correct and appropriately measured policy response we need, given the balance of risks," Taylor said in the text of a speech due to be delivered at an event hosted by Barclays and the Centre for Economic Policy Research, a think tank.

Taylor reckoned that the BoE's interest rate — which it held at 3.75% last week — was 0.75 percentage points higher than his estimate of neutral, the level of interest rate that neither stimulates nor restrains the economy.