King tells TSC he cannot win on interest rates

Bank of England governor Mervyn King appeared before the Treasury Select Committee this morning to answer questions on his inflation forecasts and quantitative easing programme.

MPs are concerned the latest round of QE will drive inflation up further from its current level of 5.2%. King was asked to provide more details on his recent predictions inflation levels will begin falling back to the bank's 2% target level next year. He said: "The first thing that will happen as we go into the New Year is the effect of the increase in VAT last January will disappear from the 12-month window used to calculate inflation. "We'll see that some of the large energy price increases and fuel prices drop out. Commodity prices have started to fall back. "That will carry on ...