The Bank of England raised its forecast for economic growth and said inflation might exceed the 2 percent target in 2012 even if policymakers started increasing interest rates from a record low.
The central bank signalled that the UK economy had started expanding again and would not revert into a recession, according to quarterly predictions published in London yesterday.
Inflation would accelerate in the first quarter before reaching a trough of about 1.1 percent a year later.
The Bank of England last week expanded its bond purchase plan to £200 billion (R2.5 trillion), saying that the economy would endure a "slow recovery". The bank said yesterday that third-quarter gross domestic product (GDP) data showing the economy stayed mired in its longest recession on record would probably be revised up.
"The outlook for inflation in the medium term is... higher than in the August report, reflecting the stronger projected distribution for GDP growth," the bank said. - Bloomberg
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