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By Sumeet Desai and Matt Falloon

LONDON, Feb 10 (Reuters) – The Bank of England may have to pump more money into Britain’s fragile economy, Governor Mervyn King said on Wednesday after the central bank forecast inflation would stand well below target in two years.

Presenting the BoE’s quarterly Inflation Report, King said recovery from the worst recession since World War Two would be slow with output below pre-crisis levels for some time to come.

And that gloomy outlook did not even take into account the likelihood of fiscal policy being tightened hard after an election expected on May 6.

The pound fell and government bonds rallied as investors bet it would be a long time before the BoE started raising interest rates from their record low of 0.5 percent — and could even boost its 200 billion pound asset-purchase scheme.

“It is far too soon to conclude that no more purchases will be needed,” BoE Governor Mervyn King told a news conference.

LONDON, Feb 4 (Reuters) – The Bank of England announced on Thursday no increase to its unprecedented 200 billion pound asset-buying programme, but left the door open to more so-called quantitative easing if economic conditions deteriorated.

It also left UK interest rates at a record low of 0.5 percent, as expected.

Almost all analysts had predicted a pause in the programme after 11 months of pumping newly-created money into the economy but sterling rose and gilts fell as some traders had positioned for an increase, given the fragility of the economy which has only just come out of recession.

The BoE said that, on balance, the prospects were for a gradual recovery in the level of activity but the high level of spare capacity in the economy after the recession meant inflation would fall below the target for a period.

LONDON, Aug 25 (Reuters) – The financial crisis has tipped the arguments in favour of central banks acting to stem asset-price bubbles but they will need new instruments to help them do this, Bank of England Deputy Governor Charles Bean said on Tuesday.

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By David Milliken and Matt Falloon
LONDON, Aug 6 (Reuters) – The Bank of England took a far
bigger step than expected to boost Britain’s recession-hit
economy on Thursday, stunning markets by expanding its
quantitative easing plan to 175 billion pounds from 125 billion.

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LONDON, July 30 (Reuters) – The Bank of England said on Thursday it would launch its Secured Commercial Paper Facility on Aug. 3 to improve the functioning of corporate credit markets.

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    LONDON, July 14 (Reuters) – The Bank of England’s quantitative easing will keep stimulating demand even when the asset-buying programme stops, the central bank’s deputy governor, Charles Bean, said in an interview published on Tuesday.
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