Bank of England governor Mark Carney says the UK economy will achieve its 2 per cent inflation within two years, according to reports.
Speaking at the World Economic Forum in Davos, Switzerland on Saturday, Carney said evidence of wage growth would aid the Bank in avoiding a period of deflation.
He said: “We have the responsibility, we have the means and the will to return inflation back to target within the two-year horizon.”
Last month, inflation dipped to a record-low of 0.5 per cent, owing largely to a prolonged slump in oil prices.
Carney also welcomed the £822m quantitative easing programme announced by the European Central Bank last week, which he said would help to encourage spending and keep interest rates low.
However, he also warned the programme must be kept under close scrutiny to ensure it does not encourage traders and governments to take similar risks to those seen before the financial crisis.