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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.

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Sir Mervyn King: Inflation is 'not out of control'

The Bank of England Governor has insisted that the rate of inflation is not out of control, despite the Bank's prediction that it will stay above the 2% target for the next two years.

He told ITV News' Economics Editor Richard Edgar that the higher rate of inflation is "not desirable" but that it would be better to tolerate it in "in the short term" than risk damaging the recovery.

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