The BoE raised its forecast for growth in the world's fifth-largest economy to 1.5 percent, up from the decade-low 1.2 percent it predicted in February, thanks largely to better prospects for the global economy.
BoE Governor Mark Carney later told a news conference that rates would have to increase more quickly than markets now anticipate - if the predictions proved correct.
Bank of England policy-makers said today (May 2) that Brexit has driven a wedge between optimistic households and pessimistic businesses, adding to the complexity of setting monetary policy.
During the first quarter of 2019 the British economy probably grew by a relatively strong 0.5 percent due to businesses building up stocks ahead of Brexit, the BoE said - faster than the 0.2 percent growth it forecast in February.
"There appears to have been more stockbuilding than expected", the BOE said.
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The BOE continues to stand out as a leading central bank that is committed to lifting its key interest rate, although a move this year is regarded by investors as increasingly unlikely given the lack of clarity about Brexit.
Britain's departure from the European Union, originally due for March 29, was delayed last month until October 31, unless parliament approves a deal sooner.
However, it expects economic growth to receive a boost from easier financial conditions in the global economy following decisions by the U.S. Federal Reserve and the European Central Bank to pause planned rises in their key interest rates.
The Bank also blamed a slowdown in global growth for the weakness of the outlook for the United Kingdom and added that business investment was unlikely to return until the dust had settled on the Brexit debate, and then only modestly, in contrast to the Treasury's forecast of a significant Brexit dividend.
Analytical and educational webinars hosted several times per day, Trading guides to help you improve your trading performance, A guide specifically for those who are new to forex, And you can learn how to trade like an expert by reading our guide to the Traits of Successful Traders. "We expect the path of interest rates, as and when they do go up, that rise to be limited and gradual".
Mark Carney the Governor of the Bank of England listens to a journalist's question during an Inflation Report Press Conference at the Bank of England in the City of London, Thursday, May 2, 2019. On the plus side, a 'no deal Brexit looks to have been averted for now and there are hopes of progress in the talks between the ruling Conservatives and the opposition Labour Party.