Bank of England

Fears we are facing a period of prolonged inflation are "unfounded", said Monetary Policy Committee (MPC) member Adam Posen, speaking on a day when UK inflation dropped sharply.

The Bank of England has proposed setting up an internal oversight committee to monitor and assess the processes employed in making financial stability policy decisions.

Bank of England governor Mervyn King has urged investors and public authorities to pay less attention to ratings agencies, which he said have often "rushed" to downgrade.

UK CPI inflation fell from 4.8% in November 2011 to 4.2% last month, the largest drop since December 2008, according to the Office for National Statistics.

The UK is already back in recession and will not see any interest rate rises until at least 2016, according to economic thinktank the Centre for Economics and Business Research (CEBR).

The Bank of England's Monetary Policy Committee (MPC) has held fire on its quantitative easing (QE) programme and kept interest rates at their historical low of 0.5%.

The pound has fallen to a three-month low against the dollar ahead of a Bank of England Monetary Policy Committee meeting today, the first of 2012.

INTEREST RATES

Members of the Bank of England's Monetary Policy Committee (MPC) voted unanimously to hold rates at their historic low and maintain the quantitative easing (QE) programme at £275bn - but they indicated more QE could be on the way.

Bank of England chief economist Spencer Dale has predicted inflation will fall to around 3% early next year and is confident the latest round of quantitative easing will prop up the economy.