The Bank of England has predicted that British inflation is likely to stay close to its 2% target over the next two years. The figure, in the bank's quarterly inflation report, suggests it is no hurry to move interest rates. The inflation forecast was slightly stronger than in the bank's previous report.
Today's report said economic growth was likely to pick up in the near-term before easing back in the second year of its forecast period. 'The overall risks are to the downside for growth and broadly balanced for inflation,' the BoE said.
Risks included the outlook for consumer spending, exports and the impact of high energy prices. The bank said its projection was for a steady expansion in consumer spending, while it noted that recent figures pointed to continued recovery in the housing market.
The bank kept UK interest rates steady at 4.5% last week, and most analysts had forecast that sluggish growth and slowing inflation would open the door for another cut this year.
