The Chancellor has defended the Bank of England over rising inflation and denied the government is making its job more difficult.
In particular he denied the decision to raise VAT to 20% at the start of last month was making conditions harder for the Bank, dismissing its effect as a one-off.
"I think any monetary authority can see through temporary increases in price levels to look to permanent threats to inflation," he said.
His comments come as governor Mervyn King is under pressure over the decision to keep interest rates at their record low of 0.5% for two years, despite rising prices.
However, Osborne said he had faith in King and the MPC despite inflation hitting 4%, which is double the target figure, the Daily Telegraph reports.
"The Bank of England has credibility," Osborne said. "I have complete confidence in it."
The Chancellor said he had no desire to alter the 2% target for the official measure of inflation, the Consumer Price Index (CPI).
"The inflation remit is the correct one," he said. "I have no plans or thoughts about changing it and, as my exchange of letters, with the Governor confirmed, I'm happy with the approach they are taking and trust the judgment of the MPC."
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