The Bank of England has raised its inflation forecast for two years' time to around 1.8%, more than some economists had predicted.
Its quarterly inflation report will likely dampen expectations of further quantitative easing (QE).
Before Wednesday’s report, a number of economists had forecast a further extension of QE in May, and on average had seen inflation at around 1.6%, up from 1.3% from November’s report.
Last week the Bank’s Monetary Policy Committee voted for another £50bn of quantitative easing over the next three months, taking the total to £325bn.
The Bank said growth will be sluggish in the short term with the eurozone crisis posing the biggest threat to Britain’s economic recovery.
Inflation hit a three-year high of 5.2% in September, but by last month it had eased to 3.6% after a hike in VAT at the start of last year fell out of the annual comparison.
