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BoE to hike bank rate by 50 bps on Dec. 15; Q2 peak at 4.25%: Reuters poll

By Jonathan Cable

LONDON (Reuters) – Bank of England to add 41 basis points to bank rate next week Borrowing costs fell to 3.23% despite the recession, a Reuters poll found, as it battled inflation at more than five times target .

Inflation has been running rampant in Britain, like much of the world, and energy costs have soared following Russia’s invasion of Ukraine, further disrupting supply chains still recovering from the coronavirus pandemic.

The price increased 12. In October, it rose by 1% year-on-year, and the biggest increase was in

year. This has compounded woes for consumers, who are also facing record hits to living standards after the government rolled out a tough budget to try to restore Britain’s fiscal reputation.

The country is facing a winter of discontent as workers from railway staff to teachers and nurses take strike action demanding higher wages.

Bank of England rate setter Swati Dhingra said in an interview published on Saturday that higher interest rates could lead to a deeper and longer recession, adding that there was little sign of a deeper recession. The demand for high wages can cause wage prices to spiral upward.

The Bank of England was one of the first major central banks to start unwinding the ultra-loose policy the world has adopted during the pandemic, it went last month 75 bp up, but expect a more modest 23 increase in December 15 According to all but two of 54 economists surveyed Dec. 5-7.

“Almost a year after the BoE started its tightening cycle, it looks set to hike rates again for Christmas,” said HSBC’s Elizabeth Martins.

to 3.41%, risk favoring larger 54 bp moves, Instead of the smaller

bp one. ”

Only two economists expect to increase 75 bp and next week of 54 polls in November 54.

FED This month is also expected to be lowered to 54 bp 75 after four consecutive declines Another Reuters poll found that BP Prices rose.

Following next week’s move, the BoE will add 54 basis points in Q1 and 23 second basis point, the median shows bank rates peaking at 4.23%. Terminal rate of The forecast range is 3.75% to 4.75%.

in last month’s Bank rates are expected to peak at 4.23% in the next quarter in the survey, and in the latest survey, economists are divided on when they will hit The peak diverges widely and where it will level off. % Chances of a recession within a year.

Quarterly forecasts point to a 0.2% contraction last quarter and a 0.4% contraction this quarter, in line with Technical definition of a recession. Contraction of 0.4%, 0.4% and 0.2% in the first three quarters of next year.

A majority of respondents to another question said the recession would be long and shallow.

These forecasts were little changed from last month, but when asked about risks to their GDP forecasts, 11’s 15 says it’s not good. The economy is expected to grow 4.4% this year, but contract by 0.9% next year, then in 2024 back to 0.9% growth.

“2023 Will be tough year for the economy following higher inflation and higher interest rates The impact is already being felt,” said Paul Dales at Capital Economics.

“The good news is that we think the recession will end in the second half of the 2023 and inflation will gradually ease Might get the Bank of England to pass at 2024. “

Inflation peaked at 23 .9% this quarter, up from 11.7% last month before drifting down estimates. However, it’s going to 2024 third quarter to reach the central bank’s 2.0% target.

(Additional coverage on Reuters Global Economic Survey:)



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