Policymaker calms fears over inflation

"If there was going to be a recovery that either was inflationary or otherwise meaningfully different from that established pattern, it should have been evident by now," Mr Posen said.

"We've fended off a financial crisis, currency and interest rates are stable and there is price stability because, while we overshot a bit on our inflation target, let's be realistic, 3.5 per cent is a far cry from double-digit inflation."

Mr Posen, who was the sole voice on the nine-strong Monetary Policy Committee calling for a 50bn expansion of the Bank's quantitative easing scheme this month, also said the financial sector was not "fixed yet".

Meanwhile, judging the level of spare capacity in the economy is particularly difficult at the moment, although surveys suggest it is relatively modest, the Bank's deputy governor Charles Bean said yesterday.

In a largely theoretical speech to a conference in London, Mr Bean looked at the challenges of interpreting data during the financial crisis and what lessons could be learnt.

He gave little indication of his voting intentions at next month's Monetary Policy Committee.

"While judging the margin of spare capacity is always a problem for policy makers, it is particularly difficult at the current juncture because a banking crisis accompanied by a deep recession is likely to lead to some impairment of the economy's supply capacity," he said.