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The Governor added: “In six months time, we should be able to look back and see what impact this has had on credit and spending. Over that horizon, we should certainly see some impact.”

He said £75 billion would probably be injected over a three month period: “I can’t be precise. We’ll aim to do about £75 billion in three months.”

The Governor pointed out that the Federal Reserve had ended up injecting less into the US economy than originally intended because it had appeared to stimulate spending: “The experience of the Fed has been that actually they cut the scale of their sales because the operation has been quite successful in generating private capital raising — so we might need to do less if it works.”

Asked by Michael Fallon, the committee deputy chairman, what the “exit plan” was, Mr King replied: “We have an exit strategy - the obvious thing is to raise interest rates and tighten monetary policy. We have to take actions that we feel are consistent to keeping inflation close to target in the medium term.

“What will keep our feet to the fire is the inflation target — that’s why we have one.”

Today it emerged that the Bank's key measure of inflation, the Consumer Price Index, had unexpectedly risen from 3 per cent to 3.2 per cent in February, prompting Mr King to write another letter to Alistair Darling, the Chancellor, to explain why inflation remains above the 2 per cent target.

Mr King told MPs that the enormous amount of stimulus being put into the economy should have some impact “down the road”, along with the weakness in sterling along with an end to the current cycle in which companies have been de-stocking — which he described as the “Honda effect”.

He added: “Those three factors are all factors leading us to expect some sort of recovery.”

Mr King said his biggest concern was the state of the world economy and its sharp decline since October.

He went on: “World trade fell by five per cent during the last quarter of last year. Exports from Japan fell by 40 per cent in the year to January, most of which was since October, while almost every country in the world has published data showing falls in industrial production during the last quarter.

“I cannot recall such a sudden severe and sychronised downturn in world output.”

Mr King said he would be looking for evidence that nominal spending and nominal demand in the economy was picking up and for signs that the ‘stock cycle’ was coming to an end.

He said this would be one of the factors which might lead the Bank to “move to the exit strategy sooner”.

He said there was still uncertainty about the balance sheets of Britain’s major banks which was leading to continued stresses in the interbank markets.

Asked by Labour MP Mark Todd whether the Monetary Policy Committee (MPC) system had worked, ‘arch-dove’ David Blanchflower — who voted for aggressive interest rate cuts last year before other members of the committee — said: “I blame myself for not convincing others. I have stood up for myself and that’s a strength of the system."

Professor Blanchflower said his most valuable contribution to the MPC meeting was his insight into the US economy: “The tsunami that blew in from the West, I saw. The fact that I was more bearish on the US economy than the Fed and others was my most important contribution.”

He said he expected the UK to show negative economic growth for the whole of 2009 and warned that more homeowners would lose their homes this year as unemployment continued to rise.

Mr King said he was puzzled by Lord Mandelson’s recent accusation that the Bank had not done enough to help the car industry.

He added: “I was slightly surprised because the car industry is indeed getting help from the Bank.”

He stressed that whether the industry deserved special help or not should be one for the Government.

He went on: “I have a great deal of sympathy for the car industry, I think they’re facing particular problems, but central banks should not be in the business of making judgements on what parts of the economy should benefit from a preferential allocation of credit even if there were a case for it. That should be in the hands of the Government.”

Spencer Dale, the Bank’s chief economist, repeated his comments — first made in The Times last Friday — that he expects to see signs of recovery in the economy towards the end of the year.

Explore Economics

• Pre-Budget Report 2009

• Budget 2009

• World Economic Forum

• The Times MPC

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