Bank of England cuts growth forecast for UK economy to 2.5 percent from 2.9 percent

The Bank of England is downgrading its forecast for the British economy's growth this year from 2.9 percent to 2.5 percent.

Governor Mark Carney sounded a pessimistic note Wednesday on productivity, saying it remains weak and is expected to stay below past average growth rates.

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The bank said interest rates are expected to increase to its 2 percent target within two years, as falls in oil and food prices ease. Interest rates are at a record low of 0.5 percent.

Britain's economy is one of the fastest-growing among developed nations but the bank is anxious to stoke the recovery and push up inflation, which is weak.

Prime Minister David Cameron, who has just won a second term in office, has pledged to continue budget cuts designed to bolster growth.