The Bank of England has hinted that UK rates may have to rise further in coming months in order to keep inflation on target at 2%.

In its quarterly inflation report, the Bank said inflation could rise as high as 2.7% without a rate rise.

But while the Bank said it had raised its expectations for economic growth, it warned that high energy bills still posed a risk.

The news comes a week after the Bank raised rates to 4.75% from 4.5%.

The Bank's governor, Mervyn King, said the Monetary Policy Committee had opted to raise rates "against a background of firm growth and limited spare capacity and with inflation likely to remain above target for some while".

"It [the MPC] remains ready to take whatever action might be necessary in the future," he added.

Further rises?

However, experts said that uncertainties raised by the report made it unlikely that the Bank would opt for more than one more rise in rates.

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