Economists Don't Expect Another BOE Hike After November

Updated on
  • Economists say central bank will raise rate to 0.5% next month
  • Policy makers have signaled increase in ‘coming months’
U.K. Economy Too Weak for Rate Hike, Generali Says

If economists are to believed, November could be the last live Bank of England meeting for quite some time.

The U.K.’s first interest-rate increase in over a decade will take place at the Nov. 2 announcement, according to 76 percent of those surveyed by Bloomberg, up from 22 percent of respondents in September. But the economists don’t see another hike until the first quarter of 2019, with a further 25 basis-point tightening coming later that year -- beyond Governor Mark Carney’s scheduled departure date in June.

That predicted path is at odds with the market’s view. While money-market traders are pricing in an 87 percent chance of the Monetary Policy Committee lifting rates from a record-low 0.25 percent next month, they are fully pricing in another hike by August 2018.

Policy makers will receive a slew of new evidence to inform their decision this week, starting with the latest inflation data at 9:30 a.m. London time. That report, forecast to show consumer prices rose at their fastest annual pace in five years in September, will be followed by wage and retail sales data.

Carney will also have the opportunity to refine his policy message when he testifies before lawmakers in London later today. In comments last week, he stuck to the MPC’s line that a rate increase would be appropriate in the “coming months,” but declined to be any more specific on the exact timing.

Follow our TOPLive blog of the committee hearing here. Click here to set a reminder to watch it live.

The latest Bloomberg survey also showed economists see the economy growing 1.5 percent this year and 1.3 percent in 2018. That’s unchanged from the predictions in September.

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