Page last updated at 15:52 GMT, Tuesday, 1 March 2011

Bank governor confirms 'choppy' economic recovery

The governor of the Bank of England, Mervyn King, told MPs on the Treasury Committee on 2 March 2011 that there was no "magical way" to bring down inflation.

He gave evidence on the bank's recent monthly report that showed that the annual inflation rate according to the Consumer Prices Index (CPI) rose to 4% in January, up from 3.7% in December.

Retail Prices Index (RPI) inflation - which includes mortgage interest payments - rose to 5.1% from 4.8%.

The CPI measure has now been one percentage point or more above target for 14 months.

The rise has put pressure on the Bank of England to raise interest rates - three members of the Monetary Policy Committee have now reportedly voted for a rise from the current historic 0.5% low.

However Mr King said whilst raising rates could lower inflation, it could also lead to increased job losses and a lower wage growth.

He re-iterated his claims that the country's economic recovery was "choppy" but said there were signs that the economy was rebounding, following December's dip, which the government blamed on the wintry weather.

Treasury committee membership


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