By Max Clarke

The Bank of England's Quarterly Inflation Report was published this morning, showing consumer price index (CPI) inflation exceeded the Bank's 2% target. CPI inflation, predicts the report, will peak between 4-5% and will remain significantly above target for the next year or so.

The Bank predicted that GDP growth will likely accelerate over the year, up from the shock 0.5% contraction seen over the winter. Poor performance at the start of the year has seen weaker predictions for 2011 growth than in the previous quarterly report, and current growth is below that of November 2010.

Jeremy Cook chief economist at World First currency exchange commented:

“The fears over the growth prospects for the UK are likely to stymie those who are looking for a rate rise sooner rather than later, rampant inflation or not.

“The Monetary Policy Committee (MPC) is still looking towards the spare capacity in the UK economy to pressurise inflation, something that was shown in this morning’s unemployment numbers…”

Overall growth will remain 'highly uncertain'- particularly with regards to private demand- which could grow rapidly or pose further 'downside risks'.

In terms of policy decisions, the MPC predict inflation will continue to be high and will not be adjusting the Bank Rate of interest, not their stock of asset purchases for the 'medium term'.