Bank weighs cutting rate for bank reserves

"It is important to remember that the very small positive growth rates or small falls in output in other countries in the second and possibly third quarter are really very small in comparison with a sharp fall in output that took place at the end of last year and beginning of this," he added.

King said there was a need for a very credible overall plan to make sure public finances were on a sound footing but added there was still time to do that.

Cutting debt and reining in a huge budget deficit are emerging as the central argument in the run-up to the election.

King took issue with comments in the New Statesman magazine last week in which former MPC member Blanchflower criticised him for ignoring his early warnings about looming recession last year.

King said Blanchflower's account did not coincide with his own recollections.

"... (Blanchflower) has chosen to make a statement of this kind and he is entitled to do this. I think it was unwise and not sensible for someone on the committee to do that."

Earlier, official data showed British consumer price inflation slowed less than expected in August as transport costs rose, partly offsetting a downward impact from utility bills and food prices.

Inflation has fallen more slowly in Britain than in other countries, but the Bank of England reckons the large amount of spare capacity built up during the recession will bear down on prices for some time to come and could push it even further below its 2 percent target.

(Editing by Chris Pizzey)