Chancellor George Osborne called on Wednesday for the Bank of England to do more to help spur the country's stagnant economy as he announced another cut to growth forecasts for this year and 2014.
Osborne said the central bank's inflation target would remain at 2 percent a year - but that that was not enough.
"As we've seen over the last five years, low and stable inflation is a necessary but not sufficient condition for prosperity," he told parliament as he announced his annual budget.
Osborne said he was launching a review of the Bank of England's mandate and said it might need to use "unconventional monetary policy instruments" and give a clearer idea of what it will do in the future.
At the same time, Osborne said he was making some immediate changes to the remit he sets for the bank each year.
"The new remit explicitly tasks the MPC (Monetary Policy Committee) with setting out clearly the tradeoffs it has made in deciding how long it will be before inflation returns to target," he told parliament.
Osborne also said the country's economy was now expected to grow only 0.6 percent this year, half the rate predicted only three months ago, but he vowed to stick the course on austerity.
"It is taking longer than anyone hoped, but we must hold to the right track" Osborne said as he began delivering his annual budget to parliament.
Forecasts by Britain's budget watchdog showed growth was expected to pick up to 1.8 percent in 2014, he said.
That was also lower than the watchdog's December forecast but Osborne said it would be stronger than the growth expected in France and in Germany next year, Osborne said.
Despite a slump in opinion polls, Osborne and Conservative Prime Minister David Cameron have stuck to their push to fix Britain's budget deficit and rising public debt, hoping for a recovery before they fight for re-election in two years time.
Britain's economy may be back in a recession again, while rising inflation is hurting households.
(Reporting by UK bureau; Editing by Jeremy Gaunt)