CPI seen around 1.6% in 2 years; 1.8% in 3 yrs.

Sees Rates at 0.6% in Q2 2013; 1.0% by start 2015.

Growth seen subdued in near term, then gradual recovery.

The BOE Inflation Report shows inflation well below its 2% target in 2 years time despite its decision to leave the stock of official asset purchases (QE) unchanged at its May MPC meeting. Inflation is put around 3% in 3 years while underlying growth remains subdued through the near term, with the euro zone, fiscal consolidation and tight credit constraining expansion. A gradual recovery stays the mainline scenario, but the euro zone crisis remains a 'significant threat' to that. The committee says that the risks of inflation being above or below 2% by the end of the forecast period are broadly balanced.