The Bank of England is right to hold interest rates at record lows of 0.5% as governor Mervyn King takes a long-term view, according to George Osborne.
The Chancellor of the Exchequer supports the MPC's interest rate policy, despite inflation surprising on the upside in April as it hit 4.5%, up 0.5% on the previous month.
Osborne said: "It is always a matter of concern when inflation is above target but the governor and the MPC are doing the right thing," Bloomberg reports.
"The job of the independent Monetary Policy Committee is to look through temporary factors and for medium-term trends for inflation."
Following yesterday's 4.5% inflation figure, King has had to write another letter to Osborne to explain why the MPC has not yet raised interest rates.
Yet Osborne conceded the spike in consumer prices, which is the highest since the collapse of Lehman Brothers in October 2008, means UK consumers are having a "very tough time," although he backs King's argument the inflation rise is temporary and the pressure will ease by 2012.
Osborne also said his budget plans, whichh aim to slash the deficit within four years, were delivering lower interest rates, to provide a further boost for the economy.
He said: "Britain is one of the few countries that is moving up rather than down the credit-rating scale."
In his letter to Osborne, King said although inflation is likely to rise in the next few months, it should fall back towards the 2% target next year.
The increase has been largely driven largely by the VAT hike, and by higher energy and import prices, he added.
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