Sir Mervyn King, presenting the Bank’s latest Quarterly Inflation Report, 20 years after it issued its first one, said “a recovery is in sight”.
But he said the outlook for inflation had worsened since November.
He now expects the inflation rate, currently 2.7%, to rise to at least 3% by the summer and to remain above the Bank’s 2% target for two years.
The Bank’s last report in November said that inflation would fall back towards its 2% target in the second half of this year.
Sir Mervyn said that factors outside of the Bank’s control – increases in university tuition fees and utility bills – had added to inflation recently.
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