BOE to hike rates by 25 bps on Thursday, inflation to peak in Q2 – Reuters poll

According to a majority of the economists polled by Reuters, the Bank of England (BOE) is expected to raise the bank rate by 25 basis points this Thursday.

Key takeaways

“The Monetary Policy Committee will add another 25 basis points to Bank Rate this week, taking it to 0.75% - its pre-pandemic level.”

“The Bank is expected to follow up this week's increase with another 25 basis point rise next quarter and a matching increase in Q3.”

“It will then raise Bank Rate to 1.50% early next year, the median showed, although that rate was picked by 15 of 44 economists while 21 saw it lower and eight higher. In February it wasn't expected to reach there until 2024.”

“Inflation was expected to peak at 7.7% next quarter, almost four times the Bank's 2% goal and a sharp upgrade from the 6.6% median given last month. It was expected to slow in following quarters but won't reach target until late 2023.”

“And 15 of 18 economists said it was likely or very likely they upgraded their medium-term inflation forecasts in the coming months. Only three said it was unlikely.”

“Following January's buoyant expansion this quarter's outlook was changed to 0.7% from 0.4% but the following quarters were all downgraded to 0.4% from last month's 0.9%, 0.6% and 0.6%.”

“Annual rates were also lowered with growth now pegged at 3.9% this year and 1.7% next, down from 4.3% and 2.1%.”