Her comments will likely be read as a sign that the central bank is in no hurry to raise interest rates in order to bring down inflation, which hit its highest level in more than a decade in May.
"The mistake we could make, and we are all worried about this, is of holding policy too tight, and the economy weakening more than in necessary to get inflation back on target," Barker was quoted as saying on the Times (1832.HK) newspaper's website on Sunday.
The BoE held interest rates at 5 percent for the third month running on Thursday and markets are still betting the next move in borrowing costs will be up in order to tame inflation despite signs that the economy is weakening fast.
"The worst mistake we could make, very clearly, is to allow inflation to get out of control," Barker was quoted as saying. "We could avoid that in the short-term by holding policy really tight and really acting as inflation nutters. But we are not doing that."
Barker also told the newspaper that lot of the recent gloom on the economy "is somewhat overstated."
"What are people really concerned about when they talk about recession? I guess they are concerned about something like the early 1980s or early 1990s, and at present I don't think something like that is very likely."
"There may have been some life in retail sales in the second quarter," she was quoted as saying.
Source:http://uk.biz.yahoo.com/13072008/325/bank-s-barker-wary-keeping-rates-high.html
