The Bank of England said monetary policy would need to be tightened to bring medium-term inflation back on track, confirming market expectations that interest rates would start rising in May.
In a letter to the chancellor George Osborne that was triggered by a 4 per cent increase in consumer prices last month on the back of surging food and petrol costs, Mervyn King said inflation was “likely” to return to the Bank’s official 2 per cent target on “the assumption that [the] Bank rate increases in line with market expectations”.
