- POSTED: 14 May 2014 18:49
The Bank of England raised its 2015 growth forecast on Wednesday, adding that the economy was heading "back to normal" as the recovery picks up speed.
LONDON: The Bank of England raised its 2015 growth forecast on Wednesday, adding that the economy was heading "back to normal" as the recovery picks up speed.
Gross domestic product (GDP) was set to grow by 2.9 per cent next year, upgraded from the previous estimate of 2.7 per cent, the central bank said in a statement.
The economy was expected to expand by 3.4 per cent in 2014, and by 2.8 per cent in 2016, but both figures were unchanged from the prior forecasts given in February.
"The UK economy continues to perform strongly ... The economy has started to head back towards normal," BoE governor Mark Carney told reporters at a press conference, presenting the bank's latest outlook.
The BoE also forecast that annual inflation would remain close to its government-set 2.0-per cent target over the next two to three years.
Carney added that policymakers anticipated that an economy would move from a recovery supported by household spending, to an expansion that was sustained by business investment.
The BoE, meanwhile, sharply revised down its expectations on unemployment, predicting that the jobless rate would fall to 5.9 per cent in two years.
Official data published earlier on Wednesday showed that the key unemployment rate dipped to a five-year low point of 6.8 per cent in the January-March period, from 6.9 per cent in the three months to February.
Analysts said the latest forecast could stoke expectations that interest rates could increase before Britain's next general election due in May 2015.