"The Bank of England's May Inflation Report lends some support to our view that interest rates are set to rise sooner than markets expect".
The steady outlook for growth contrasts with a sharp slowdown in the official measure of growth seen at the start of this year, when the economy expanded just 0.3% on the quarter - less than half its rate at the end of last year.
Prime Minister Theresa May is pushing for a trade agreement to be negotiated at the same time as Brexit, but her European Union counterparts made it clear they want to settle the bulk of the divorce proceedings before any future trade talks can start.
However, the Bank of England said it expected a pick-up in foreign trade and investment would offset a shortfall in domestic demand this year.
The policy statement released thereafter supported the view that, on the assumption of a "smooth" transition to Brexit, monetary policy will likely tighten by a somewhat greater extent than the market is now pricing-in.
The new projections are conditioned on a path for Bank Rate that rises to just 0.5% by mid-2020, around 20 basis points lower than in the February Report.
The Bank of England has warned households that living standards will fall this year as the Brexit vote works its way through to higher prices and meagre pay deals.
In February BoE Governor Mark Carney warned of "twists and turns" on the road to Brexit.
The Bank of England's (BoE) Monetary Policy Committee (MPC) voted by a majority of 7-1 to leave monetary policy unchanged at today's "Super Thursday" meeting, as expected.More news: Gallery: Chelsea Celebrate Fifth Premier League Title With Fans
"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 Bank said in a summary of its meeting. The increased cost of importing products into the United Kingdom is the main factor pushing up CPI, which the Bank now expects to reach 2.8% at the end of 2017, slightly higher than the February forecast of 2.7%.
The grim outlook for Britain's economy comes four weeks before a general election that will decide Brexit's framework as put forth by Prime Minister Theresa May.
Growth slowed sharply to 0.3% in the first three months of the year from 0.7% in the previous three months.
The "dividend policy remains progressive. but 2017/18 dividend growth [is] to be lower than the 10% previously anticipated", the telecom services company said in its fourth-quarter report.
The pound slumped following the governor's announcement, falling 0.4 per cent against the U.S. dollar to below 1.28.
At the same time, the Bank has revised up its inflation projections for 2017 from 2.7pc to 2.8pc.
Deputy governor Ben Broadbent insisted the pain for households, amid lower wage growth and higher inflation sparked by the collapse of the pound, would let up over the next three years.
Echoing language from the last policy meeting in March, the BoE said it would not take much upside news on growth and inflation for some other members of the MPC to join Ms Forbes.