Bank of England upgrades its growth forecast
The Bank of England has upgraded its UK growth forecast for next year and said it expects unemployment to fall more quickly than previously thought.
It forecast GDP to grow by 3.4% this year – unchanged from its previous prediction – but increased the target for next year from 2.7% to 2.9%. However, the forecast for 2016 has fallen from 2.9% to 2.8%.
Meanwhile, the bank sharply revised down its expectations on unemployment, predicting that the rate would fall to 5.9% in two years. The UK unemployment rate was 6.8% in the quarter to March.
The forecast could add to expectations that interest rates will go up before next year's general election while the bank said inflation will remain at or below its 2% target for the next three years.