The Bank of England on Wednesday boosted its forecasts for growth and inflation but still sees subdued price pressures and a slow recovery as the economy limps out of its deepest recession in decades.

The British pound came under renewed pressure, off 0.6% at $1.6647, as the central bank welcomed the impact of a weaker currency. The euro rose 0.9% to 0.9032 pence.

The central bank, which publishes its inflation projections, boosted its forecast for inflation, projecting that annual consumer prices will jump above its 2% target in the near term as a temporary cut in value-added tax is unwound. But inflation is projected to then fall back.

Inflation is still expected to remain below the target over the two-year policy horizon. The bank’s projections imply that it expects inflation running at about 1.6% in the third quarter of 2011, compared with a forecast of 1.42% two years forward in its August report.

The outlook, however, also implies that there’s little need for a further increase to the bank’s money-creating quantitative-easing program, economists said. The program was boosted by 25 billion pounds ($41.8 billion) to a total of 200 billion pounds earlier this month.

The report painted a benign inflation outlook that underlined expectations that the central bank, which has left its key lending rate at a record-low 0.5% for the past eight months, will remain on the sidelines over the medium term.

During a news conference, King said the quantitative-easing program has been a success. He also said it would be wrong for investors to assume that the recent increase of 25 billion pounds was meant to signal the program’s last gasp.

The Bank of England’s policy-setting committee has a “completely open mind as to whether we would do more asset purchases,” King said.

In the report, the central bank said the lower level of sterling, which has slipped on a trade-weighted basis in the wake of the recession, should aid the re-balancing of the U.K. economy. The weaker currency will bear down on British imports, along with weak domestic demand, while boosting U.K. exporters’ share of world trade, although that could take time, the report said.