Doubts raised over governor's view on inflation rate

Inflation has been significantly above the central bank's two per cent target since December, hitting a 17-month high of 3.7 percent in April, although it eased slightly in May.

King attributes the pick-up in price pressures to changes in Value Added Tax, volatile oil prices and the past depreciation of sterling and says the effect will fade as slack in the economy will bear down on prices.

Speaking at an economic conference, Mr Posen said: "The only place where I would point to or acknowledge a direct difference with the Governor is this issue of how much, looking backwards, you want to say that this was just a series of one-time shocks, where I think he has been pretty clear up to now saying that has been the case.

"That is why we have nine members on the committee. And at some point the committee makes a decision," he told the Society of Business Economists.

In a speech earlier, Mr Posen had said that above-target inflation had probably been due to a modest "unanchoring" of inflation expectations, but that this was not sufficient grounds to tighten policy when there were strong downward risks from fiscal austerity, especially in the euro zone.

If demand from the United States and emerging economies was enough to outweigh euro zone weakness, and inflation expectations remained above target, Mr Posen was sure the Bank could rapidly tackle the latter problem.

"If we end up overshooting inflation because we end up happily in the good (growth) outcome, then I am very confident we can bring it back down. We know how to do that."

Household inflation expectations had only risen so far on short-term measures, and not on a five-year horizon, while financial market

measures of inflation expectations did not yet show a strong rise, he added.

The budgetary tightening announced by Britain's coalition government in its June emergency Budget was roughly on the scale expected, but it was too early to draw exact conclusions about its impact, Mr Posen added.

Mr Posen also said the central bank could restart its quantitative easing programme to purchase assets if the UK faced a deflationary shock, though he could offer no guarantee that it would prove fully effective.