Published by Zeb BhamSterling suffered on the foreign exchange market after the Bank of England lowered its inflation forecasts.The Bank said that inflation is likely to fall well below the target rate of two per cent in two years' time, signalling to traders that more quantitative easing could be on the cards.Senior currency strategist at BNP Paribas, Ian Stannard, told Reuters that the market had not factored in the forecasts for the state of the economy in two years' time, despite its correct assumptions for the short-term.As a result, sterling has "reacted accordingly", he said.The Bank of England's report followed signs from the Federal Reserve that the recovery has a faltering pace, which limited appetite for risk.The dovish report from the Bank has led some analysts to conclude that interest rates are unlikely to be changed by the bank any time soon, with growth in quantitative easing more likely.For more information on foreign exchange treasury services and risk management, visit our Corporate FX site