Commodity price risk
The BoE said global commodity prices posed risks to both sides of this inflation projection, however. If more supply or weaker demand proved persistent, prices could fall, it said in its report, whereas adverse geopolitical developments or tighter supply could push prices higher.
Interest rates in the country are now not expected to rise from historic lows until late 2015, and BoE Governor Mark Carney stressed that he "know(s) how to raise interest rates" and would "when appropriate".
"It's appropriate that while tightening in monetary policy remains in prospect, markets now expect somewhat easier monetary conditions over the forecast period than was the case three months ago," he said in a press conference following the Inflation Report.
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The Bank of England's gross domestic product forecasts were little changed. It now expects growth of 3.5 percent this year, 2.9 percent in 2015 (down from earlier forecasts of 3 percent) and 2.6 percent in 2016 and 2017.
"The main downside risk stems from weaker euro-area activity, which would weigh on U.K. exports and could be associated with a further rise in financial market volatility," the BoE said in its report.
"But there are also risks to the upside—for example, greater momentum in U.S. growth or larger impacts than expected from European Central Bank or Bank of Japan policy actions."