Mervyn King, governor of the Bank of England (BoE), has recently indicated that if global and local economic conditions continue as they are it is unlikely that Britain will see interest rate cuts in the next two years.

When he presented the Inflation Report for May, King said: “The rise in inflation is coming from shocks from the rest of the world economy and these are coming in the next six months into the price level, and they will be there for another 12 months. It does not make sense to try to bring inflation back to 2% within that timeframe, but looking two years ahead we should we should certainly be trying to bring inflation back very close to that target.”

Contrary to other media reports, this is not a definite ‘no to interest rate cuts’. A spokesman for the BoE explained that decisions on interest rate cuts are always made on a monthly basis and reflect what is happening both in Britain and globally with no one being able to predict with absolute certainty what will happen over the next two years.