Bank of England Expected to Raise Rates in Q1 2022

The Bank of England will wait until early next year before raising borrowing costs, later than anticipated earlier. The central bank is waiting for further information on the economic impact due to the omicron variant, according to Reuters poll.

In Reuters November poll, only handful number of economists expected a rise from 0.10% to 0.25% in December 16. According to Reuters report, policy maker Michael Saunders earlier voted for interest rate hike last month, said he seeks for more details about the new variant before deciding how to vote this month.

“While the Dec. 16 meeting has looked like an incredibly close call at times, we think the MPC will vote unanimously to keep rates on hold, amid the considerable uncertainty around the COVID-19 situation,” said Elizabeth Martins at HSBC as reported by Reuters.

“One of the reasons we have been saying since the summer for why February is the earliest likely time for a hike is because of the risk of a winter wave of COVID-19 weighing heavily on economic activity.”