The Bank of England has raised its forecast for inflation this year to 2.8% – up from its February forecast of 2.4%.

Economic growth has also been trimmed to 1.9% from 2%, according to the bank’s quarterly inflation report.

Interest rates were held at 0.25% to stay in line with the Monetary Policy Committee’s inflation target of 2%.

The inflation rate remained at 2.3% in March due to a fall in sterling and rise in consumer prices. Reflecting this, GDP growth slowed to 0.3% in Q1 2017.

Suren Thiru, head of economics at the British Chambers of Commerce, said:

“Longer-term uncertainty over the impact of Brexit on the UK economy is also likely to weigh on UK monetary policy decision-making. Against this backdrop, the most likely scenario is the MPC will opt for a prolonged period of monetary stability and keep interest rates steady over the near term.”

Rain Newton-Smith, chief economist at the Confederation of British Industry, said:

“There are mixed messages on economic momentum, with survey indicators pointing to stronger growth than official data. Any changes to monetary policy are unlikely in the near future, particularly amid ongoing uncertainty over the impact and outcomes of EU negotiations.”

Kate Smith, head of pensions at Aegon, added:

“Inflation can hit people on fixed incomes hard, particularly pensioners. As people are living 20 or more years in retirement they need to think seriously about how they can protect themselves from the ravages of higher inflation eating away at their income and savings.”

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