Key facts
- A majority of economists now expect the Bank of England to raise its key interest rate to 4.0% in November.
- This is a reversal from last month's poll, where 90% expected rates to remain on hold.
- Markets are fully pricing in four quarter-point rate rises by the end of next year.
- British inflation is forecast to average 3.6% this quarter and 3.8% next.
- The British economy had the best growth performance among G7 nations in the first half of the year.
The Bank of England is expected to raise its benchmark interest rate to 4.0% in November, a significant shift from previous expectations, according to a Reuters poll of economists. Persistently high inflation has prompted a majority of economists to reverse their stance, with 54 out of 63 forecasting a 25 basis point hike next month. This contrasts sharply with last month's survey, where approximately 90% anticipated rates would remain unchanged for the rest of the year. While markets are fully pricing in further rate increases by the end of next year, economists are more divided on future hikes beyond November. Inflation in the UK is projected to average 3.6% this quarter and 3.8% next, with forecasts revised upward from previous estimates. Despite these inflationary pressures, the British economy showed the strongest growth among G7 nations in the first half of the year, though the full-year growth forecast was only modestly revised to 1.3%.