Treasury may change inflation target to include housing costs

While any decision on the Bank's inflation target will be made by the Treasury, Mr Haldane said: "As an economist, I would hope at some point in the future we may move to an index which better reflects consumption."

Mark Carney, the Governor of the Bank, has described the introduction of CPIH as a "useful development", while Lord King of Lothbury, his predecessor, lobbied for its introduction.

The Treasury has raised the issue of whether CPI is an appropriate inflation target in the past. In a letter in 2010, Chancellor George Osborne asked Lord King "how we might accelerate the process of including housing costs in the CPI inflation target".

CPI inflation stood at 1.6pc in March, compared with CPIH inflation of 1.5pc. The retail prices index (RPI) measure of inflation, which is no longer classed as an official statistic by the ONS, but is still used to calculate pay deals and fare increases, stood at 2.5pc.

Meanwhile, Spencer Dale, another Bank policymaker, said the Bank remained vigilant about developments in the housing market. "We know we should be nervous about what is going on in the housing market. The housing market we know from experience has the ability to turn from relatively comfortable warmth in terms of supporting the economy to overheating very quickly," he said.

Mr Dale also said that the Bank had the tools to cool a London-specific housing bubble if needed, although he believed there was not enough evidence to suggest house prices were getting out of control.

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