A Reuters poll of more than 40 economists revealed that the Bank of England is expected to begin hiking rates by mid-2016.
The forecast of a mid-2016 year rate hike comes despite the BoE suggesting that it might wait much longer.
The timing of a rate hike slipped back to the second quarter, according to the results of the Reuters poll taken in late October. The results found that 33 of 43 respondents expect the first basis point increase from 0.5 percent to happen after March.
Bank Governor Mark Carney left loose monetary policy unchanged on November 5 and said that the country’s low inflation is expected to gradually increase. The central bank is acting far more dovish than expected.
Brian Hilliard at Societe Generale, one of the economists who changed their minds from last month, now expecting rates to begin increasing towards the end of 2016:
He said: ”The November 5 BoE Inflation Report was the make-or-break moment for expectations of a UK rate hike early in 2016. The MPC seemed broadly happy with the market rate curve which predicts the first rate increase around the end of that year,”
“If the MPC were seriously trying to prepare the markets for a rate increase in Q1 2016 then it would have needed to markedly change the tone of its rhetoric to inject a note of urgency into its comments. In fact, it went in the other direction.”
The poll revealed that inflation is expected to average 1.3 percent in 2016 and isn’t forecast to reach the central bank’s target until 2017.