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“The Bank of England (BoE) will raise borrowing costs 50 basis points (bps) higher than was thought only two weeks ago, in two quarter-point moves, as elevated inflation proves tricker to bring down than had been expected,” per the latest survey of 52 economists by Reuters.
It’s worth noting that the June 14 poll suggested that the BoE policymakers will draw a halt at 5.00% next quarter.
“A cut in borrowing costs was not expected until the second quarter of next year,” added the survey respondents.
Markets are now pricing in a terminal rate of 6.00% and while that is higher than the poll median, the vast majority of respondents to an extra question, 31 of 34, said the bigger risk to their terminal forecast was that it peaked higher than they currently expect.
Only one economist had a 6.00% peak as their base case.
Over 95% of common contributors to this poll and the June 14 survey, 43 of 45, raised their Q3 forecasts.
Forty of 52 poll participants said the Bank would dial down the pace to 25 basis points on August 3 but gave a high median 40% chance of another 50 basis point lift.
Also read: GBP/USD Price Analysis: Slides towards 1.2690 horizontal support within weekly triangle
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