BOE says inflation to remain high, but predicts 'modest, sustained' recovery

LONDON – The Bank of England says it is predicting a modest and sustained economic recovery for the U.K. but warned that inflation will remain above its targets for the next two years.

In its quarterly inflation report, the central bank says inflation is stuck above the 2 per cent target and is set to edge higher over the coming months, partly due to the pound’s weakness and external pressures.

Still, it added Wednesday that private-sector wage growth and fading external price pressures mean that inflation should gradually fall back to around 2 per cent.

The bank also said the U.K. economy should pick up, growing by 0.5 per cent in the second quarter of this year, and that the main risks to Britain’s economic recovery continue to come from abroad.