Mervyn King, governor of the bank of England, has written a letter to chancellor Gordon Brown explaining why inflation breached a three per cent upper limit in March.
It is the first time that such a letter has ever had to be written and the occasion has given ammunition to critics of Gordon Brown’s economic administration.
Mr King is required to write the letter under of system implemented by Mr Brown in 1997 that calls for the missive in cases where the rate of inflation deviates by more than a percentage point from its set target of two per cent.
In the body of the letter, the governor of the Bank must explain what has caused the deviation and what steps will be taken to right it.
Despite opposition party criticism, prime minister Tony Blair insisted that Gordon Brown has done an excellent job as chancellor.
“I challenge anyone to name me a chancellor with a better economic record than this one,” he said.
Market analysts are now expecting the base rate of interest to be raised again in may in an effort to bring inflation under control.
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