In its latest world Economic Outlook report, the OECD supported the decision to drop interest rates to 0.5% for the duration of the recession, however, it added that the Bank should pay more heed to the current inflationary threat.

According to the OECD, the Bank will have to raise interest rates "no later than the last quarter of 2010" and to 3.5% by the end of 2011.

The recommendation runs counter to the latest assertions of Bank of England governor Mervyn King, who has repeatedly stated that inflation will come back below the 2% target (from its current peak of 3.7%) without having to raise interest rates, due to spare capacity in the economy.