BOE on a one-a-year path on interest rate increases

Bloomberg

The Bank of England is on a one-a-year cycle when it comes to interest-rate increases, according to economists surveyed by Bloomberg.
The BOE lifted its benchmark to 0.5 percent on November 2 — the first hike in a decade — and the median forecast is for another move in the fourth quarter of 2018, earlier than then 2019 prediction in the October poll. There will be another rise in third quarter of the following year, taking the rate to 1 percent.
The results broadly tally with current market expectations, which the BOE has acknowledged, though not explicitly endorsed, giving it leeway should circumstances change. Deputy Governor Ben Broadbent has said while two more increases will probably be needed to get inflation back to target, there are “always unknown things and unpredictable things.” In the Bloomberg survey, economists see growth averaging 1.4 percent next year and 1.6 percent in 2019, with consumer spending barely above 1 percent, which would be well below the post-recession average.
The survey comes before data projected to show inflation climbed to 3.1 percent in October, more than a percentage point above the BOE’s goal. That means Governor Mark Carney will have to write a letter to the government explaining his policy response, but it may also be the peak, with a slowdown in the rate of price growth forecast through next year.
That outlook, coupled with relatively modest economic growth, means the BOE was never expected to go on an aggressive rate-hike cycle. At Bloomberg Economics, analysts predict an even more modest pace, with no hikes at all in 2018. They see a little more slack in the labor market than the BOE and
expect that to persist next year.