Household squeeze 'to worsen'

The Bank of England governor made clear today that the squeeze on household budgets will only get worse. Sir Mervyn King said he expected inflation to rise to three percent or more by the Ssummer and stay above target for another two years.

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King: Lowering inflation would risk 'derailing recovery'

Bank of England Governor Sir Mervyn King has defended what he described as a "temporary albeit protracted period of above-target inflation".

He said that any attempt to lower inflation to below the 2% target would "risk derailing the recovery".

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