King: Higher inflation is 'the hand we have to play'

The Bank of England's Monetary Policy Committee will tolerate missing the inflation target for the next two years in order to support the UK recovery, said Bank governor Mervyn King.

Presenting a downbeat quarterly inflation report, outgoing governor King said the Bank must play the hand it has been dealt and manage higher inflation for longer. The report suggested inflation would not fall back to its 2% target until 2016. His comments echo those of incoming governor Mark Carney, who said in a speech at the World Economic Forum in Davos last month that he is willing to see higher inflation for longer in order to boost the economy. Speaking this morning, King said of missing the target: “It is not desirable, but it is the hand we have to play.” The inflation...