Reuters poll points to rate hike in first quarter of 2016
The Bank of England will begin to lift interest rates early in 2016, according to Reuters' latest poll, despite the Bank of England (BoE)tentatively backing market expectations for a later move.
The central bank cut its British growth forecasts early in May, and BoE Governor Mark Carney reiterated that prospective rate hikes would be gradual and not exceed 2% by the end of 2017.
However , the median forecast in Reuters latest poll of nearly 60 economists indicated that the Bank would make an initial 25 basis point hike to 0.75% in the first quarter of next year.
That being said, the same economists reduced their estimations of a move before April to 55%, down from 60% a week earlier, while over a third were more uncertain about their predictions.
Any increase would be followed by similar moves in subsequent quarters, to bring the BoE's benchmark rate to 1.25% by the end of the year.
Britain's recovery in the wake of the financial crisis has slowed steadily since the start of the year, with official data on Thursday revealing first quarter GDP growth sat at just 0.3%.
"Slow growth increases the risk that the BoE will be in no rush to hike rates and that once rates do start to move higher the pace of policy moves is likely to be slower than in previous cycles," said Jane Foley, senior strategist at Rabobank.
Furthermore, inflation dipped into the red at minus 0.1% in the 12 months to April, the first deflation registered since 1960, although BoE officials expect a rebound in the near-term.
None of the 57 economists polled expected the bank to make a move at the meeting on 4 June.