Bank of England raises interest rates again in February as inflation soars: Reuters poll

London โ€” Bank of England will push the tightening cycle forward next month as red-hot inflation far exceeds its target and the economic threat of the Omicron coronavirus mutant proves to be milder than previous mutations. The investigation revealed.

The central bank of the United Kingdom became the first major interest rate setter to raise interest rates since the start of the coronavirus pandemic last month, with markets and many economists expecting a delay.

The central bank said it had to take action at the time as there were signs of warning on the underlying inflationary pressures.

Inflation, which was reported on Wednesday at a high of nearly 30 years in December, peaked in the next quarter before it began to decline in the third quarter and must reach the BoE 2% target until the second quarter of next year. The survey added. Pressure the central bank to act.

Median inflation forecasts for this quarter and the next quarter jumped from 4.7% and 4.6% in the polls released in December to 5.2% and 5.5% in the latest poll released on Friday.

“Inflation is likely to rise again, increasing the temptation for Bank of England policymakers to raise rates twice in a row in February this year,” said James Smith of ING.

The market is priced about 85 percent next month with BoE’s main interest rate likely to rise to 0.50 percent.

UK consumers are facing the additional headache of an estimated 50% increase in energy costs in April, in addition to the increased social security burden.

In a January 17-20 poll, nearly 65% โ€‹โ€‹of respondents expected a 25 basis point increase from 0.25% when the BoE Monetary Policy Committee met on February 3, until the end of March. Is expected to rise to 0.50%. It was over 75 percent.

Median forecasts show that BoE raised its main interest rate by another 25 basis points in the third quarter, a quarter earlier than last month’s forecast, but waited until early next year, again earlier than before. Raise it to 1.00%. Be expected.

When asked how high that rate would be in the current cycle, the median response was 1.50%, which was still historically low.

In preparation for action, the Federal Reserve will raise interest rates three times this year, another Reuters poll found.


Britain’s economy exceeded its pre-pandemic scale in November. Official data showed last week, but some of that momentum may have been lost as people were at home before the holiday season to ensure their health for the Christmas celebrations.

According to Springboard data, shoppers in central London on Christmas Eve were 30.3% less than last Friday.

According to polls, economic growth was expected to slow to 0.6% this quarter after expanding 1.0% at the end of 2021. It will then grow 0.9% in the next quarter and slow to 0.7% and 0.6% in the next two quarters.

Bank of England
On July 29, 2021, people passed the Bank of England during the morning rush hour during the coronavirus disease (COVID-19) epidemic in London. (Henry Nicholls / Reuters)

GDP growth in 2022 was fixed at 4.5%, with a median of 66 economists of 2.2% in 2023. This follows the 7.0% increase expected last year.

Prime Minister Boris Johnson took a light touch approach in dealing with Omicron and was not enough to impose rigorous measures during the previous wave. On Wednesday he announced the end of most COVID-19 restrictions.

Therefore, when asked how the Omicron variant affects the economy compared to the Delta variant, all but three of the 24 respondents to the additional question are milder. Or answered that it would be much calmer.

“I think the fact that the number of COVID-19 cases will be slightly lower towards spring and the whole economy of people who want to go out and spend money will support their confidence,” says George Buckley of Nomura. Says.

“It suggests that personal consumption, especially service spending, will increase as we stop buying things and start buying experiences.”