Bank of England warns inflation will hit 4% this year but holds interest rates

Monetary policy committee resists pressure to increase the cost of borrowing, but hints at rise next year

Inflation is forecast to hit 4% this year as Britain's robust recovery from the pandemic accelerates at a blistering pace, the Bank of England has said, hinting that a modest increase in interest rates next year might be needed to keep rising prices in check.

With most of the economy open and businesses reporting strong sales, the central bank's monetary policy committee (MPC) said the economy would grow by 8% in 2021 - up from a forecast in May of 7.25% - to regain its pre-pandemic level of activity by the end of this year, rather than spring 2022.

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