By Daniel Hunter
The latest Bank of England inflation report has seen the governor, Sir Mervyn King, upgraded the economic growth forecast.
The report also says that inflation should fall faster than previously predicted, with King predicting that it should drop to its target of 2% within two years.
"Today's projections are for growth to be a little stronger and inflation a little weaker than we expected three months ago," King said.
"That's the first time I've been able to say that since before the financial crisis.
Sir Mervyn said the Bank now expects GDP growth of 0.5% during the current quarter.
"This hasn't been a typical recession and it won't be a typical recovery. Nevertheless, a recovery is in sight."
Marcus Bullus, trading director at MB Capital, commented: "Sir Mervyn's valedictory Inflation Report was always going to be bullish.
"With one eye on his legacy and one on the economy, the temptation to look for positives must have been overwhelming.
"He assured us once again that the 'recovery is in sight'. It is, if you are peering through the Hubble space telescope.
"The Governor's prediction that the bank rate will remain below 1% for at least four years hardly hints at confidence.
"The Bank's loose monetary policy is clearly unlikely to change any time soon, and its inflation targets will be quietly ignored until things improve.
"The UK's meagre rates of growth only look good when compared with the triple-dip recession being endured across the Channel.
"With stubbornly high inflation and rising unemployment, the UK may be on the road to recovery, but it is limping rather than walking back to growth."
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