But, while King admitted inflation is unlikely to return to the target rate of two per cent within the next two years, the Governor states that any rise in inflation should not be taken as representative of the health of the economy as a whole.
"This is not the result of easy monetary policy and nor does it reflect what's going on in the economy," warned King, asserting, "A recovery is in sight."
Despite negative GDP growth in the last quarter of 2012, thought to have been caused by a dip in manufacturing and services output in the wake of the short-lived Olympics boom, King sees progress on the horizon.
But while strong employment figures suggest the current state of stagnation in the economy reflects poor productivity, additional financial investment may be required in order to stimulate long-term GDP growth. King stated:
"Growth is likely to be weak in the near term, but further out a continued easing in domestic credit conditions, supported by the Bank's asset purchase programme and the Funding for Lending Scheme, together with the stronger global backdrop, underpin a slow but steady recovery in output."
King's comments highlight the need for more readily available lending capital for businesses, which many small and medium sized enterprises have cited as a major barrier to growth in recent years. Aldermore is committed to supporting this crucial step on the road to economic recovery, and has already played a major role in the government's Funding for Lending scheme, providing over 40 per cent of credit issued through the scheme.
Looking ahead to the future, the bank firmly intends to renew this pledge to shake up British banking in order to facilitate fairer lending conditions for SMEs. Through this on-going initiative, Aldermore will concentrate on offering a variety of lending and saving products especially designed to meet the evolving needs of smaller businesses.
The bank will also maintain its close relationship with government, working alongside major bodies to ensure schemes like the FLS continue to address the disadvantages SMEs face in accessing capital.
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