Did Sir Mervyn King just say something rather radical?

Bank of England Governor Sir Mervyn King made a speech at a CBI dinner in Belfast. Photo: PA Wire

Aside from the absolutely jaw-dropping statistic that he revealed tonight, that we have metaphorically printed enough cash through Quantitative Easing (QE) to represent a quarter of the annual total of all we make, do and sell (GDP), the Bank of England Governor, Sir Mervyn King, has said some other rather interesting things in a speech in Northern Ireland.

1) He has dropped an enormous and depressing hint that this Friday's figures that will reveal what happened in the last three months of 2012 are likely to be 'considerably weaker' than over the summer. Many economists have already warned that the economy shrank again at the end of last year, but with the authority of the Governor now weighing in, Friday's numbers won't make cheery reading.

2) On that happy note, although he acknowledges QE has its limits, he makes plain that the Bank is willing to press the button again if they judge it's needed. Potentially then, MORE than a quarter of annual GDP might be floating around courtesy of the Bank's intervention.

3) Sir Mervyn admits that the record levels of rock bottom interest rates set by the Bank (more than three years and counting) can not and should not go on for ever - they are 'not consistent with a sustainable economic recovery' he says. The Bank is all too well aware that in this economy putting up rates now would be toxic, with thousands of businesses and mortgage holders hanging on precisely because of low rates. But as savers know, he suggests there are downsides and warns it can't go on for ever.

4) Perhaps most interestingly, King seems to flirt with the idea of making major changes to the Bank's main job, controlling inflation. He very clearly warns against dropping the inflation target of 2% in the long term. But he suggest that perhaps it is time to change the way the regime works - 'in the UK the inflation target was introduced almost 21 years ago, and now it has come of age. It would be sensible to review the arrangements for setting monetary policy.' Maybe to take a more long term view rather than the narrow monthly targeting. Perhaps even to think again about whether monthly interest rate decisions are the way to go.

He has obviously been paying attention to US Federal Reserve's significant recent decision to specify its overall goals for the American economy. In December the Fed said they would take action to keep pumping money into the economy until the US unemployment rate fell to 6.5% or inflation went to 2.5%, planning to take action to keep stimulating the economy all the way through to 2015. For central banks being that explicit and open about long term goals is a radical departure. With King's successor Mark Carney floating the idea of a target for GDP, and Sir Mervyn himself suggesting that the regime he has presided over could be ripe for change, the Bank of England's primary job could change a lot in the years ahead.