However, it is projecting a drop to 2.6% in 2018 and to 2.2% in 2019, lower than previously predicted rates of 2.8% and 2.5%.
"Yet, the BOE's forecast inflation trajectory assumes that the current dynamic - whereby weak wage growth keeps domestic cost inflation in check while imported inflation overshoots - is set to normalize as the jobless rate moves towards its estimated long-term equilibrium rate of 4.5 percent by 2020".
The Bank of England has trimmed its 2017 GDP growth forecast from 2.0% to 1.9%, slightly lifted the GDP growth projection for 2018 and 2019 to 1.7% and 1.8%, respectively.
It said growth had fallen "markedly" in the first quarter and added a "slowdown appeared to be in train".
But recent purchasing managers' index (PMI) survey data from the three main sectors of the economy suggest it bounced back in April, pointing to growth running at a rate of 0.6%. Monetary policy can not prevent either the necessary real adjustment as the United Kingdom moves towards its new global trading arrangements or the weaker real income growth that is likely to accompany that adjustment over the next few years.
The head of the UK's central bank Mark Carney has said Britain should enjoy solid economic growth through to the end of the decade, but only if the government achieves a smooth departure from the European Union.
The Bank's rate-setting committee held rates at 0.25 per cent in May, but one member Kristin Forbes voted for a rise to 0.5 per cent.
He said growth and inflation could easily exceed the BoE's forecasts made in February, although his comments came before poor economic growth figures for the first quarter.
"The market may even get excited about tomorrow's MPC (Monetary Policy Committee) meeting", a strategist at Societe Generale, Kit Juckes told Bloomberg.
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Ben Brettell, senior economist at Hargreaves Lansdown, said: "The Bank warned that rates may have to rise sooner and faster than the market now expects".
Policymaker's used today's update to say that rates may rise sooner than markets think, if the economy grows in line with the forecast.
It said it then sees a sharp pick-up in hitherto lacklustre wage growth as unemployment fell to its lowest in a generation.
At the latest meeting, quantitative easing has been kept unchanged at £435bn, and corporate bond purchases remain at £10bn.
All eight members of the bank's Monetary Policy Committee (MPC) opted to leave the amount of QE cash stimulus pumping around the economy at £435 billion ($560 billion, 515 billion euros).
Sterling hit a one-week low against the dollar on Thursday after the Bank of England's inflation report showed interest rates were unlikely to rise within the next two years.
"The key takeaway is that the Bank of England is still very much in wait-and-see mode".
"The Bank of England is stuck between a rock and hard place", said Aberdeen Asset Management Chief Economist Lucy O'Carroll.
Carney defined a smooth Brexit as an agreement on future European Union trading arrangement and a transition deal as the United Kingdom exits the bloc. They also assume a transition period, which is far from being certain. A number of analysts were surprised by the bank's assumption in its forecasts that the talks would go smoothly.
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