Bank of England to wait until February to next raise rates, economists say
TLT•Economists polled expect the Bank of England to hold its Bank Rate at 4.00% in December and next raise it in February. The median forecast sees rates peaking at 4.25%, while inflation is expected to reach 4.3% early next year.
1. December hold expected
All but one of 65 economists surveyed expect the Bank of England to leave its Bank Rate at 4.00% after its Monetary Policy Committee meets in the week before Christmas. The exception expects a rate increase. The economists’ median view is that the next increase will come in February, although some said incoming inflation data could support a December move.
2. Inflation and rates outlook
The MPC voted 8-1 last week to raise rates by 25 basis points; one member preferred a 50-basis-point increase. The vast majority of economists expect the Bank Rate to peak at 4.25%, while only a handful forecast a further increase to 4.50% next year and seven expect no increase from 4.00%. Inflation rose to 3.5% in September from 3.1% in August. Economists’ median forecast sees it peaking at 4.3% early next year, then averaging 2.6% in the fourth quarter of 2027.
3. Growth forecasts rise
Britain’s economic growth accelerated to 0.7% last quarter, its fastest pace in 2-1/2 years. Economists raised their forecast for GDP growth this year to 1.5% from 1.3%, while keeping next year’s forecast at 1.2%.
