LONDON, Nov 14: Following are highlights of Wednesday’s press conference with Bank of England deputy governor Mervyn King as he presented the Bank’s quarterly inflation report:

The fact is that doemstic demand in the UK has been stronger than we expected and stronger than most expected.

Said statement that U was performing better than G7 economies was statement on its position in the cycle rather than on the structure of the economy.

We’ve had three discussions on (currency) intervention which have been recorded in the minutes. On all three occasions the committee came to the conclusion that it felt it was not something that would serve a useful purpose.

I think if anything the experience of Japan in the last few months will reinforce that. The scale of intervention in Japan has been truly massive and it had remarkably little effect on the exchange rate.

Regarding the scale of the intervention of the MPC we don’t think there’s any reason to suppose that any major adjustment of the scale of the exchange rate people are talking about would come about by intervention.

It’s always the balance of risks that determines the policy decision. I think if you want an explanation for why we felt a half point (rate cut) was the right magnitude for a rate cut last week I think the answer is in that table (table showing balanced risk for inflation.

After making that rate cut (last week) we feel we are on track to meet the inflation target.

On the exchange rate there are risks clearly on either direction, the rate could go up or go down.

It’s that long-run picture that would lead one to suggest there is a risk.

The committee judges there is more of downside risk on the exchange rate than an upside risk.

The present level of imput prices is consistent with the forecast that we publish in the inflation report, with an outlook where the balance of risks to inflation is very much evenly divided around the central projection or target of 2.5 per cent looking two years ahead.

Said the Bank saw a recession as a contraction over 12 months.—Reuters