Bank of England may increase rates late 2022 or sooner
The Bank of England is set to move for an earlier-than-expected increase in borrowing costs at the end of 2022. However, it could be sooner due to persisting high inflation and a strong economic recovery.
Bank rate will likely increase from its current record low of 0.10% to 0.25% in the last quarter of 2022, based on a Reuters poll conducted in September 6-9.
The BOE became one of the central banks in the world that trimmed their borrowing costs amid the coronavirus pandemic and restarted quantitative easing program.
Britain experienced massive supply chain disruption due to the COVID-19 pandemic. Its exit from the European Union has worsened this problem and even resulted in border disruptions, delays, and labor shortage.
These issues drove up prices. Economists predicted the inflation rate at 2.6% this quarter, 3.5% in the next quarter, and 3.4% in early 2022.
Britain’s economy was still expected to improve 2.5% this quarter and 1.5% in the next quarter.