In its quarterly economic update the BoE raised its forecast for economic growth to 0.5% and predicted that inflation will ease more quickly than previously expected.
Mervyn King, governor of the Bank of England, said: "Growth to be a little stronger and inflation to be a little weaker than we expected three months ago.
"That's the first time I've been able to say that since before the financial crisis."
But he added: "This is no time to be complacent. We must press on to ensure a recovery and to bring down unemployment."
King warned that risks still remain for the UK economy, most notably from the continuing crisis in the Eurozone.
