The Bank of England has published its latest forecast for the UK economy, predicting robust growth and low inflation over the coming years.

Publishing its quarterly inflation forecast, Bank governor Mervyn King said the "key risk to the forecast" was whether labour costs remain subdued.

And while there is some overall uncertainty, the balance of risks is "somewhat to the downside" of the central forecast.

According to the report, Britain's output growth has hovered around the trend level since November.

"Retail sales weakened, though the underlying picture for household spending is, as yet, unclear," it added.

"In the committee's central projection, four quarter GDP growth remains robust and close to trend over the forecast period, while inflation rises gradually, passing through the two per cent target during the second year.

"The balance of risks, both to growth and inflation, is to the downside."

According to the Monetary Policy Committee, risks also include the outlook for the world economy, the prospects for domestic spending, the development of productivity, the evolution of wages, and the behaviour of
import prices.

Interest rates are currently at 4.75 per cent, and have remained unchanged since August last year.

At a meeting earlier this month, the committee concluded that "no change in the current level of the official interest rate was necessary to keep inflation on track to meet the target in the medium term."