In response to questions from MPs at a Treasury committee, the Governor accepted the need for economic stimulus leading to higher fiscal deficits but he questioned the wisdom of further increasing debt by spending more given the already heightened levels of UK debt resulting from a raft of recent stimulus packages. Instead he counselled "targeted and selected measures" in some areas of the economy.

His comments came as official figures showed a surprise rise in consumer price inflation (CPI) to 3.2% in February, from 3% in January, largely led by the rising cost of imported goods due to the weak £.

He said "Given how big those deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits. I think the fiscal position in the UK is not one where we could say, 'well, why don't we just engage in another significant round of fiscal expansion'."