BNP Paribas economists have revised their forecasts on the timing of monetary policy tightening by the Bank of England, and now expect that a rate hike will occur at the February meeting. Earlier, economists expected that the rate would remain at the current level until the May meeting.
"Given the improvement of the coronavirus situation in the UK and the further strengthening of inflationary pressure, we see the need for an earlier tightening of the monetary policy of the Bank of England. We expect that in February the rate will be raised by 0.25%, to 0.50%," said Paul Hollingsworth, chief European economist at BNP Paribas, and added that the rate hike will trigger the process of reducing the Bank of England's balance sheet.
The International Monetary Fund said yesterday that the UK will be the fastest growing major industrial economy for the second year in a row in 2022. The IMF expects UK growth of 4.7% this year after a 7.2% increase in 2021.
Although the IMF cut the UK's growth forecast for this year from 5% in its October forecasts, the contraction was smaller than in most other major economies. New IMF forecasts show that the UK is growing faster than the US. The IMF lowered its forecast for the US from 5.2% to 4% due to tightening monetary policy and constant disruptions in supply chains.