According to the body, inflation is likely to fall considerably in 2012, which might suggest monetary policy will remain loose for the immediate future, Reuters reports.
Mervyn King, governor of the BoE - which was founded in 1694 and is sometimes dubbed the Old Lady of Threadneedle Street - said market direction has taken a turn for the worse of late, noting weakness in underlying activity is likely to be felt for a longer period than initially anticipated.
"There are a number of headwinds to world and domestic growth over the forecast period, not least the public and private debt overhang, and these headwinds are becoming stronger," he added.
Despite this, the BoE's quarterly inflation report spoke little of additional policy loosening via the endorsement of quantitative easing.
By Gary Cooper