The Bank of England may be forced to extend its quantitative easing programme to keep inflation at 2%, governor Mervyn King has warned.
King wrote to chancellor Alistair Darling last week to explain why inflation rose to 3.5% in January, up from 2.9% in December – its highest level since November 2008.
In his letter, King says the com-mittee will take whatever actions are necessary to keep inflation at 2%.
He says: “We will continue to monitor the appropriate scale of the asset purchase programme and further purchases would be made should the outlook warrant them.”
Minutes from the last Bank of England’s Monetary Policy Com-mittee show all members agreed not to extend its £200bn quantitative easing programme.