Bank of England Governor Mervyn King said policymakers had a "potent weapon" to support the recovery as speculation mounts over more money-boosting measures.
The central bank boss warned there was too little money in the economy, but fuelled hopes of further quantitative easing (QE) as he said monetary policy remained a powerful tool.
In a speech to the Black Country Chamber of Commerce during a three-day tour by the Monetary Policy Committee (MPC) to the West Midlands, Mr King said the amount of money in the economy as a whole - broad money - was "barely growing at all" following the financial crisis.
The Bank has already taken action through £200bn of QE to boost money supplies, but Mr King hinted at so-called QE2 to prevent a double-dip recession.
He said while the UK faced domestic and global challenges, "we can influence the outcome, with monetary policy still a potent weapon to ensure that the amount of money in the economy is growing neither too slowly, as in the recent past, nor too quickly so as to reignite inflation".
Mr King added it was a "key role" for monetary policy to provide temporary stimulus when the economy is in need.
His comments at the event in Dudley will be watched closely as expectations grow for the Bank to relaunch its QE programme soon.
Some experts expect the MPC to pump at least another £100bn into the economy as soon as next month.
Meanwhile, the US Federal Reserve has also been signalling that it too will start the print presses rolling imminently to bolster recovery efforts.
However, Mr King made a reference to the split emerging within the MPC over whether to prioritise above-target inflation or a flagging recovery, saying "reasonable people can disagree about the monetary policy judgment".
Economists widely expect minutes of the Bank's last rates meeting due tomorrow to show a three-way split among MPC members, with Andrew Sentance maintaining his call for a 0.25% interest rate hike and Adam Posen seen voting for more QE.