Inflation in Britain is likely to stick close to its 2 per cent target over the next two years, the Bank of England (BoE) is predicting.
The comments in its quarterly Inflation Report indicate the BoE is not in a hurry to to move interest rates in either direction.
The bank's new forecast for inflation was slightly stronger for the next year compared with November's projection but then broadly similar further out.
The BoE's fan chart showed the CPI rate just above 2 per cent in two years.
Growth is expected to pick up above its historical average in the near-term before easing back in the second year of the forecast period. That is also slightly stronger in the near-term than predicted in November but weaker thereafter.
"The overall risks are to the downside for growth and roadly balanced for inflation," the report said, adding that there were a range of views among the nine-member Monetary Policy Committee.
Key risks included the outlook for consumer spending and the impact of high energy prices on inflation.
The BoE said that its central projection was for a steady expansion in consumer spending while it also noted that recent data pointed to continued recovery in the housing market.
Its previous fears over high energy prices spilling over into inflationary pay deals have so far proven unfounded.