# Bank of England to raise rates by 50bps again to tame inflation: Reuters Poll
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-09-13
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Bank of England to Raise Interest Rates Again Amid Inflation Concerns
Meta Description: The Bank of England is expected to raise interest rates by 50 basis points, with the possibility of even bigger moves, as households face a cost of living
URL: https://financedigest.com/bank-of-england-to-raise-rates-by-50bps-again-to-tame-inflation-reuters-pollhtml

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By Jonathan Cable

LONDON (Reuters) – The Bank of England looks set to hike borrowing costs by another 50 basis points next week, although it may opt for an even bigger move, a Reuters poll found, adding to the woes of indebted households already facing a cost of living crisis.

That is despite some inflation expectations falling after new Prime Minister Liz Truss announced an energy support package last week, with inflation now likely to peak as much as five percentage points lower than earlier forecast.

In August the BoE [raised its main interest rate by 50 basis points](https://www.financedigest.com/how-to-raise-my-credit-score-40-points-fast.html "How to raise my credit score 40 points fast"), taking it to 1.75% in its largest move in 27 years. The overwhelming majority of economists in a Sept. 9-13 [Reuters poll](https://www.financedigest.com/germany-home-prices-to-sink-nearly-6-this-year-reuters-poll.html "Germany home prices to sink nearly 6% this year – Reuters Poll"), 40 of 47, said it would add the same amount on Sept. 22, lifting it to 2.25%.

Other [central banks](https://www.financedigest.com/inflation-trumps-financial-risks-as-central-bank-tightening-set-to-continue.html "Inflation trumps financial risks as central bank tightening set to continue") have been acting more aggressively, including the U.S. Federal Reserve, the European Central [Bank and the Bank of Canada](https://www.financedigest.com/bank-of-canada-seen-on-hold-even-as-economy-accelerates.html "Bank of Canada seen on hold even as economy accelerates").

The remaining seven economists polled said the BoE would opt for a 75-basis-point hike [next week as it battles to contain inflation](https://www.financedigest.com/britains-next-sees-lower-clothing-inflation-shares-dip-on-cautious-outlook.html "Britain’s Next sees lower clothing inflation, shares dip on cautious outlook") running at more than five times its 2% target. Inflation was 10.1% in July, the highest [since February](https://www.financedigest.com/dollar-heads-for-first-weekly-gain-since-february.html "Dollar heads for first weekly gain since February") 1982.

But Truss’ power tariff cap and planned tax cuts could prove inflationary, and [Bank Rate](https://www.financedigest.com/central-banks-keep-hiking-rates-amid-banking-turmoil.html "Central banks keep hiking rates amid banking turmoil") was now expected to peak at a higher level than previously thought.

While we don’t expect the MPC to reach consensus on anything bigger than a 50bps hike at this stage, the case for further outsized [rate hikes](https://www.financedigest.com/dollar-falls-after-fed-raises-rates-forecasts-future-hike.html "Dollar falls after Fed raises rates, forecasts future hike") remains strong, if not stronger,” said Sanjay Raja at Deutsche Bank.

The BoE was expected to follow next week’s increase with another 50 basis point lift in November and 25 basis points in December, taking [Bank Rate](https://www.financedigest.com/instant-view-ecb-sticks-with-big-rate-hike-even-as-bank-fears-roil-markets.html "Instant View: ECB sticks with big rate hike even as bank fears roil markets") to 3.00%, where it will stay until at least October.

In an August survey, [Bank Rate](https://www.financedigest.com/ecbs-villeroy-rate-hike-signals-strong-confidence-in-european-banks.html "ECB’s Villeroy: rate hike signals strong confidence in European banks") was expected to top out at the end of this year at 2.50%.

When asked how the risks to that peak [interest rate](https://www.financedigest.com/hotel-investors-should-they-be-worried-about-a-potential-economic-pause-delving-into-inflation-interest-rates-recession-etc.html "‘Hotel Investors – should they be worried about a potential economic pause?’ delving into inflation, interest rates, recession etc") forecast were skewed, 18 of 19 respondents to an extra question said it would be higher or significantly higher. Only one said the risk was it would be lower.

In fact, one of the paradoxes of large fiscal support is that the [Bank may now need](https://www.financedigest.com/bank-of-england-still-needs-to-see-the-job-through-on-inflation-pill.html "Bank of England still needs to ‘see the job through’ on inflation: Pill") to tighten monetary policy by more than would otherwise be the case. An [increase to 4% is now possible,” said Neil Shearing at Capital](https://www.financedigest.com/frances-ynsect-to-refocus-bug-business-after-capital-increase.html "France’s Ynsect to refocus bug business after capital increase") Economics, who has been near the top end of those expectations for some time.

[Despite expectations for hefty rises from the central bank](https://www.financedigest.com/seven-out-of-ten-uk-adults-aged-25-44-never-seek-advice-on-dealing-with-debts-despite-depending-on-the-bank-of-mum-and-dad.html "Seven out of ten UK adults aged 25-44 never seek advice on dealing with debts despite depending on the bank of mum and dad"), Britain’s struggling pound will not regain its losses against the U.S. dollar anytime soon due to an expected recession and increased government spending, another [Reuters poll](https://www.financedigest.com/european-central-bank-to-raise-deposit-rate-to-3-25-by-mid-year-reuters-poll.html "European Central Bank to raise deposit rate to 3.25% by mid-year: Reuters poll") found. That will add to [price pressures](https://www.financedigest.com/heavy-norwegian-gas-maintenance-adds-to-energy-price-pressure.html "Heavy Norwegian gas maintenance adds to energy price pressure") through more expensive imports. \[GBP/POLL\]

GRAPHIC: [Reuters Poll-UK economy and monetary policy outlook](https://www.financedigest.com/thomson-reuters-keeps-outlook-but-wary-of-slowing-economy.html "Thomson Reuters keeps outlook, but wary of slowing economy") https://fingfx.thomsonreuters.com/gfx/polling/klpykabnxpg/Reuters%20Poll-UK%20economy%20and%20monetary%20policy%20outlook.PNG

![](https://onlineworldnews.com/wp-content/uploads/2022/09/122.jpg)

Inflation was now seen peaking at 10.5% next quarter, down from the 12.8% forecast just ahead of Truss’ announcement and the 11.4% expectation in August’s [poll but wasn’t seen at the Bank’s target](https://www.financedigest.com/euro-zone-inflation-seen-just-above-ecbs-target-in-2025-poll-shows.html "Euro zone inflation seen just above ECB’s target in 2025, poll shows") until 2024 at least.

Surging [prices have deterred consumers](https://www.financedigest.com/analysis-to-raise-prices-or-not-consumer-goods-makers-weigh-bets-on-buyer-strength.html "Analysis-To raise prices or not? Consumer goods makers weigh bets on buyer strength") and the economy grew less than expected in July, raising the risk it is already in a recession, official data showed on Monday.

When asked about the likelihood of a [recession within a year](https://www.financedigest.com/uk-to-avoid-recession-this-year-but-outlook-still-weak-bcc-says.html "UK to avoid recession this year but outlook still weak, BCC says") the median was 75% and within two years it was 80% although a majority of respondents to another question said it would be long and shallow.

Quarterly growth forecasts for [next year](https://www.financedigest.com/how-open-banking-will-change-the-banking-industry-in-the-next-10-years.html "How Open Banking will change the banking industry in the next 10 years") were largely revised down and the economy was predicted to contract 0.2% across 2023, a turnaround from the 0.2% growth expected in last month’s poll.

Britain’s jobless rate has hit its lowest since 1974 but the drop was due mostly to a fall in the size of the workforce and that shortage of candidates for [jobs meant pay](https://www.financedigest.com/best-paying-jobs-in-natural-gas-distribution.html "Best paying jobs in natural gas distribution") growth rose more than expected.

The [BoE’s meeting](https://www.financedigest.com/sterling-steadies-vs-dollar-ahead-of-boe-ecb-meetings.html "Sterling steadies vs dollar ahead of BoE, ECB meetings") was moved back a week following the death of Queen Elizabeth.

(For other stories from the [Reuters global economic poll:)](https://www.financedigest.com/global-2023-economic-view-downgraded-at-odds-with-market-optimism-reuters-poll.html "Global 2023 economic view downgraded, at odds with market optimism: Reuters poll")

[(Reporting by Jonathan Cable; polling by Maneesh Kumar, Prerana Bhat and Mumal Rathore; Editing by Ross Finley and Emelia Sithole-Matarise)](https://www.financedigest.com/cable-cars-and-ropeways-market-report-size-growth-demand-scope-opportunities-and-forecast-2016-2026-fmi.html "Cable Cars and Ropeways Market Report | Size, Growth, Demand, Scope, Opportunities and Forecast 2016-2026: FMI")


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