This quote is well-documented, because it appears in an interview with G.S. Viereck that was printed in a 1929 magazine article:1
[Viereck] “If we owe so little to the experience of others, how do you account for sudden leaps forward in the sphere of science? Do you ascribe your own discoveries to intuition or inspiration?”
[Einstein] “I believe in intuitions and inspirations. I sometimes feel that I am right. I do not know that I am. When two expeditions of scientists, financed by the Royal Academy, went forth to test my theory of relativity, I was convinced that their conclusions would tally with my hypothesis. I was not surprised when the eclipse of May 29, 1919, confirmed my intuitions. I would have been surprised if I had been wrong.”
[Viereck] “Then you trust more to your imagination than to your knowledge?”
[Einstein] “I am enough of the artist to draw freely upon my imagination. Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
At this point, the interviewer immediately switched to the topic of Einstein’s religious belief. This interview does not include anything extending the quote to progress, its evolution or the role of scientific research, as seen in a collection, Cosmic Religion: With Other Opinions and Aphorisms2 (1931).