LONDON, June 13 (Reuters): The Bank of England (BoE) will raise interest rates in June by a modest 25 basis points and stick to those increments in coming meetings despite inflation running close to double-digits, a Reuters poll of economists found.
But even with the threat of recession - the economy unexpectedly shrank 0.3 per cent in April - the BoE still looks set to take Bank Rate 25 basis points higher by year-end than thought just one month ago.
Its pace of rate rises remains significantly slower than its peers, including the US Federal Reserve and the Bank of Canada, which have raised rates by 50 basis points in recent meetings and are set to do more.
The June 6-10 poll showed all but one of 56 economists expected the BoE to deliver a quarter-point hike on June 16 to 1.25 per cent, its fifth consecutive rate rise. Two more are expected this year to 1.75 per cent, compared with just one in the May poll.
Roughly two-thirds, 36 of 56 economists, see the next 25 basis point hike to 1.50 per cent in the third quarter, which would most likely come at the August meeting with the next round of quarterly BoE forecasts. Around one-third see rates at 1.75 per cent by-end September, suggesting back-to-back 25 basis point rises.
The BoE will pause through the first quarter of next year, with one more rise to 2.0 per cent in Q2 2023, poll medians show.
The BoE was the first among major central banks to start hiking interest rates, in December last year, which has afforded policymakers some room on the pace of rate increases.
BoE to raise rates 25 bps in June
FE Team | Published: June 13, 2022 22:59:28
BoE to raise rates 25 bps in June
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