BOE says outlook for inflation worsens; may hit 3 percent by summer

The Bank of England says its forecast for inflation has risen since its November report and predicted the rate may hit 3 percent by summer — but it will tolerate the increase in an attempt to boost the economy.

Bank of England Gov. Mervyn King says inflation would be above the 2 percent target for another two years, but that there is cause for optimism and that recovery is in sight. He told reporters Wednesday the bank would look past inflation figures to support growth and employment.

King says the bulk of the economy grew at a steady rate of 1.2 percent in 2012.

Vicky Redwood, the chief UK economist at Capital Economics says the bank is adopting the flexible approach to inflation that incoming governor Mark Carney recently advocated.