The polling shows now that the Bank of England to raise bank rate to 0.25% in Q1 2022 (first hike seen in q4 2022 in Sept poll)
- UK economy to expand 6.8% in 2021; 5.0% in 2022 (6.8%; 5.5% in Sept poll)
- Bank of England rate hike more likely to come earlier rather than later than expected - 16 of 19 economists
BoE Governor Bailiey has been dropping a few well-placed hints of his interest in earlier hikes, this from the weekend just past:
- BoE Gov Bailey said despite inflation being temporary will act if a risk to medium-term inflation & expectations
- Goldman Sachs, JP Morgan & others forecast imminent BoE rate hikes
Back to the Reuters poll, and report:
- Medians in the Oct. 13-20 poll said the bank rate would rise 15 basis points to 0.25% in either February or March although around a fifth of respondents said the initial move would come on Nov. 4, in line with market expectations.
- Rate forecasts were collected after Bailey's comments and a significant number of economists said they were reviewing their expectations and unable to respond.
Some of the analysts' commentary:
- "The fact that underlying inflation did not continue to surge in September is consistent with our view that the extent of UK rate hikes now priced in by markets is not warranted by fundamentals," said Chris Hare at HSBC. "However, while our expectation is for the first bank rate rise next February, the ongoing inflation risks and an increasingly hawkish MPC means that the risks are tilted towards an earlier hike - December or possibly even November."
- "Unless strong signs emerge that higher inflation is here to stay we would view any rate hikes in line with market expectations as a possible policy error," said Stefan Koopman at Rabobank.
