The Bank of England said today that UK interest rates probably need to rise sooner and by a bit more than it thought three months ago.

The comments came after the bank raised its growth forecasts for Britain due to the strong global recovery. 

The Bank of England's rate-setters voted 9-0 to hold UK rates at 0.5%, as expected, giving them time to assess how the world's sixth-biggest economy copes with the approach of Brexit. 

But Governor Mark Carney and colleagues said they now wanted to return inflation to its 2% target over "a more conventional horizon".

The comments were a sign that the bank was turning its sights to tackling price growth over two years rather than three.

"Were the economy to evolve broadly in line with the February inflation report projections, monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period than anticipated at the time of the November Report," the MPC said. 

Sterling rose by more than a cent against the US dollar after the announcement, reversing its recent declines, while British government bond prices fell and share prices slipped. 

Rate futures were pricing in a more than 50% chance of a rate hike in May with an increase fully priced in for August. 

The Bank of England raised interest rates for the first time in a decade in November and said today that it now thought the next hike needed to come a bit more quickly than it thought then. 

Mark Carney said it was likely to be necessary to raise rates "to a limited degree in a gradual process but somewhat earlier and to a somewhat greater extent than we thought in November." 

Bank of England Governor Mark Carney

Before today's statement, investors saw a nearly 50-50 chance of the next hike coming in May, when the Bank of England is due to update its economic forecasts again.

The UK economy has slowed since the 2016 Brexit vote but it has fared better than many investors expected at the time of the referendum, thanks largely to the much stronger global rebound in countries such as the US, Germany and other key trading partners. 

The Bank of England has stuck to its plan to raise rates gradually, and before today's announcement financial markets were expecting UK rates to hit 1.2% by early 2021, the BoE noted, something that would suggest two or three rate hikes by then. 

However that scenario would still leave inflation above its 2% target in three years' time, the Bank of England said today, suggesting it might hikes rates by more than investors have been expecting recently. 

In November, the bank had signalled it expected two hikes over the following three years.

Meanwhile, the Bank of England today nudged up its economic growth forecasts for Britain to show an average annual expansion of 1.75% over the next three years. 

That was a lot weaker than its expectation of global growth of nearly 4% over the same period and was also below the country's pre-financial crisis average of about 2.9%. 

The Bank of England linked the sluggish British outlook to slower growth in the labour force, due to fewer immigrants coming to Britain after Brexit and to the country's ageing population. 

But even with slower growth, Britain remained susceptible to excessive inflation. 

The Bank of England said it expected the economy could only grow by 1.5% a year before it started to generate too much price pressure. 

Annual wage growth is expected to pick up to 3% by the end of 2018, in line with previous forecasts. 

The Bank of England lowered most of its inflation projections after sterling rose recently and bond yields in financial markets jumped. 

But inflation was expected to remain above the 2% target at 2.11% in three years' time.

Governor Mark Carney said last month that Britain's chances of catching up with its faster-growing peers depended largely on progress in the Brexit negotiations between London and Brussels. 

"The economic outlook will continue to evolve. There will be ups and downs in financial markets. The Brexit process will twist and turn before it is concluded," Mr Carney said today. 

Prime Minister Theresa May wants to clinch a transition deal next month to secure full access for Britain to EU markets for about two years after it leaves the bloc in March 2019. 

Some economists have said that the Bank of England has a narrow window to raise rates because later in the year, London and Brussels could be wrangling over their long-term relationship, weighing on the economy and possibly preventing the bank from moving.