The Bank of England (BoE) has forecast that inflation will rise above the two per cent target in the near term.However, in a statement accompanying the bank's latest inflation report, governor Mervyn King asserted the importance of developing a fiscal policy that is conducive to stabilising inflation in the medium-term."Monetary policy can do very little to affect these short-run movements in inflation," he said, adding that in the near term, the bank is expecting volatile spikes in inflation caused by rising fuel prices and other influencing factors such as the temporary VAT cut last year.In developing a medium-term strategy, Mr King insisted that the UK must look to plug the public and private spending gap by moving to a more export-driven economy.He added that the weakness of sterling on the currency market will provide support in this regard.Further figures from the BoE predicted sustained weakness in nominal pay growth in the third quarter of the year, which will continue to weigh on spending.