Mervyn King
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Inflation will rise sharply says Mervyn King

The Bank of England has downgraded its growth forecast for the UK and braced households for an interest rate hike as early as the spring.

In its quarterly report, the Bank confirmed that inflation was expected to rise towards 5% before falling to around the 2% target in 2012 - but only if interest rates rose in line with market expectations from the second quarter of this year.

The Governor of the Bank of England, Mervyn King, said a weak job market, and low wage growth, were helping efforts to control inflation.

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