Thursday June 26, 12:59 PM
Bank Chief: We'll Win Inflation Battle
By Sky News
Bank of England chief Mervyn King has told MPs he is confident of getting inflation back to the Government's 2% target. But an economic slowdown was needed to make it happen in the next year or so, he said. He warned
rising food and energy prices may push the cost of living increase above 4% this year. His appearance before the Treasury Select Committee comes a week after inflation hit 3.3%. That is the highest since 1997 when Labour came to power and made the BoE independent. It forced Mr King to write a letter of explanation to the Chancellor, Alistair Darling. Last week, in his Mansion House speech, Mr King said the UK faced its "most difficult economic challenge for two decades". Oil prices are now higher than the 1970s in real terms while the fall in the value of the pound had made imports more expensive, he told MPs. "This will pass through to household bills and consumer prices," he said. Outgoing deputy governor Sir John Gieve was also being quizzed by MPs today. He was given a hard time by the committee last year over the Northern Rock crisis. Members accusing him of being "asleep in the back shop" as it was unfolding.
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