Inflation to stay above 2% for all 2011, says Bank of England

Mervyn King - Governor of the Bank of England

The Bank noted that as these factors diminish in time inflation is "likely to fall back" due to spare capacity in the economy after the recession. It added: "The timing and extent of that decline in inflation are highly uncertain."

The report said that the UK recovery is expected to continue and forecast that GDP growth is "judged to be a little more likely to be above its historical average than below it for much of the forecast period".

The Bank also declared that it will maintain the

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