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Bank of England upgrades growth forecasts

The Bank of England has upgraded its economic growth forecast and said inflation should in fact fall faster than was previously predicted.

In his last inflation report as the central bank's governor, Sir Mervyn King said "recovery was in sight" and that inflation should fall to its target of two per cent in two years.

The bank said in February inflation would drop to 2.3 per cent in the same period.

Mr King said: "Today's projections are for growth to be a little stronger and inflation a little weaker than we expected three months ago.

"That's the first time I've been able to say that since before the financial crisis."

Economic growth in 2013 is now expected to be greater than one per cent, which is up from the previous estimate of 0.9 per cent.

Inflation has been above the two per cent target since December 2009 and currently stands at 2.8 per cent.

By Tony Aynsley