BoE policy maker David Miles said the margin of spare capacity in the U.K. will continue to affect the domestically generated inflation pressures, revealing that they are a good indication of where the underlying inflationary forces are and it is because they look very muted that monetary policy has been loosened over the recent past.

He said the best way to repair fiscal imbalances is to generate non-inflationary growth.

Miles added that the exit point of stimulus will depend on inflation prospects while the first step in tightening is more likely to be raising interest rate.