July 26, 2022 - 11:32 AM 352 views
According to the most recent Reuters poll of economists, the Bank of England (BoE) will probably avoid a larger interest rate increase in August and instead continue to the relatively moderate 25 basis point rises it has been delivering. However, the decision is extremely close.
29 out of 54 economists surveyed by Reuters between July 13 and 25 indicated the BoE would maintain its current 25 basis point target rate of 1.50 percent at its next meeting on August 4. The 50 basis points predicted by the remaining 25 would bring it more in line with its competitors.
The slight gap was reversed among gilt-edged market makers. Out of the 15 respondents, eight predicted a 50 basis point increase and seven predicted a 25 basis point increase.
Compared to 1.75 percent in the last poll, the majority of respondents now predict that Bank Rate will end the year at 2.25 percent or higher.
Recession odds were pegged at a median of 55% in the poll, up significantly from 35% in the June survey. However, that was based on a small sample of only 11 respondents, some of whom choose not to participate because they believed the recession had already begun.
The survey predicted that inflation, which is at a 40-year high of 9.4 percent right now, would likely peak in the fourth quarter and average 10.2 percent, which is five times the BoE's target of 2 percent.
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