Sir Mervyn King denies higher inflation is 'okay'

Several strong themes emerge from the Bank of England's quarterly report.

Inflation is strengthening, but this has nothing to do with tuition fees or regulated energy prices.

When I asked Sir Mervyn King whether he is saying that higher inflation is okay, he said 'no' but added that it was better than taking it lower and risking killing off a recovery.

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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.