LONDON (dpa-AFX) - IHS Global Insight Chief U.K. Economist Howard Archer said it is currently an extremely tight call as to whether the Bank of England lifts interest rate around February or holds fire until nearer mid-2016.
He said, 'If we had to make a call now, we would plump for a February interest rate hike from 0.50 percent to 0.75 percent - but with no great confidence in the call!'
He expects rates to reach 1.00 percent by the end of 2016 instead of 1.25 percent estimated previously.
Further, Archer said there can be little, if any, doubt that the BoE will maintain rates at a record low 0.50 percent at the conclusion of the October monetary policy meeting on Thursday.
He suspects a split vote of 8-1 at the October meeting as seen in August and September. Ian McCafferty urged a quarter-point rate hike at previous two meetings.
According to Archer, recent signs that the economy is going through a softer patch, inflation at zero and current appreciable uncertainties over the global economic outlook will deter any other policymakers from joining Ian McCafferty from voting for an interest rate hike for now.
The economist noted that the fact that the Federal Reserve held off from raising interest rates at their recent policy meeting will not be lost on the MPC. Policymakers will likely be wary that if the BoE raised rates ahead of the Fed, it would risk sending sterling to uncomfortably high levels.
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