The bank decided Thursday to maintain its inflation forecast for 2017 at 2.7 percent. The BOE sees inflation peaking at this level before edging slightly lower to 2.6 percent in 2018 and 2.4 percent by the end of 2019.
Gilt yields edged lower after the announcement with rate-setters supposedly sanguine about rising inflation. The pound moved sharply lower against the dollar, falling close to 1.260 after trading near 1.266.
Talking to reporters shortly after the release of the central banks quarterly inflation report, Governor Mark Carney was asked whether a rate hike or a rate cut would be the more likely course of action moving forwards.
"We can see scenarios in either direction," he quipped.
"This stronger (growth) projection doesn't mean the referendum is without consequence," Carney added.
In lifting its gross domestic product (GDP) forecasts for the current calendar year and next, the bank underlined the importance of the fiscal stimulus package put forward following the U.K.'s vote to leave the European Union, as well as robust economic strength in the U.S. and Europe as catalysts for Britain.
The unemployment rate in the U.K. is projected to rise slightly to 5 percent in the near term as labor demand softens, according to the BOE's February meeting minutes. This forecast is significantly lower than the 5.5 percent estimate made in November.
The BOE has acknowledged the economy's somewhat surprising buoyancy since the Brexit vote which has significantly exceeded its own expectations. However, the central bank has deferred the impact of Britain's withdrawal from the EU rather than omitted its effect altogether.
Before the Brexit referendum, the BOE's decisions and, perhaps especially, Governor Mark Carney's comments on the economic impact of an exit from the EU had been controversial. Carney has since dismissed any suggestion the central bank has a strained relationship with the U.K. government since the Brexit vote.