Business

Bank of England raises growth forecast to 2%

LONDON: The Bank of England (BoE) boosted its forecast for British growth this year and some rate-setters were more nervous about rising inflation, but the bank seems in no rush to raise interest rates as the economy adjusts to the prospect of Brexit.

The BoE said some of its rate-setters had "moved a little closer" to their limits for tolerating an overshoot of the bank's 2 per cent inflation target, caused by the Sterling's slide since last June's Brexit vote.

But the BoE, announcing its latest quarterly thinking on Britain's economy yesterday, sent broader signals that it was comfortable with its record low interest rates.

The BoE also said its rate setters now believed the unemployment rate could fall to 4.5 per cent - down from its previous estimate of 5 per cent - before it pushes up inflation.

That could give the bank more margin to keep rates at their record low for longer and may be useful as it announced the second big increase in three months to its forecast for economic growth this year.

The BoE now expects economic growth of 2 per cent this year, much higher than its previous forecast of 1.4 per cent. - REUTERS

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