Bank of England rate has peaked, to stay at 5.25% through Q2 - Reuters poll
By Jonathan Cable
LONDON (Reuters) — The Bank of England is likely done with policy tightening and will leave Bank Rate at 5.25% on Nov. 2, according to the vast majority of economists polled by Reuters who did however caution the chance of another increase this year was high.
Although inflation unexpectedly held steady at 6.7% in September, the highest of any major advanced economy, 61 of 73 economists in the Oct. 18-23 poll said there would be no move from the Bank next week, in line with market expectations.
«The Bank kept rates on hold in September and there hasn't really been much data since then to change that position. And the data we have had — wages, inflation — wasn't that different to what everybody expected,» said James Smith at ING.
«The bigger picture is the impact of previous hikes is still coming through.»
Only 12 economists forecast a quarter point rise to 5.50% at the November Monetary Policy Committee meeting.
However, 16 of 28 who answered an additional question said the chance of another lift this year was high. Despite 515 basis points of hikes since December 2021, inflation is still more than three times the BoE's 2% target.
«At some point, when it is more comfortable that core and services inflation are on an established downtrend, the MPC may want to switch to a more neutral guidance. But we don't think it will be ready to make that change just yet,» noted Elizabeth Martins at HSBC.
September's inflation data was not far off what the Bank had expected, BoE Governor Andrew Bailey said last week, adding a slowdown in core inflation, which strips out volatile food and energy prices, was «quite encouraging».
Inflation was expected to gradually decline across the forecast horizon but it won't reach
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