BoE Preview: Forecasts from 13 major banks, a fairly straightforward 50 bps hike

The Bank of England (BoE) will announce its interest rate decision on Thursday, December 15 at 12:00 GMT, accompanied by the Minutes of the meeting. As we get closer to the release time, here are the expectations forecast by the economists and researchers of 13 major banks.

The central bank is expected to slow down the pace of tightening, having delivered its biggest rate hike in 33 years in November. A 50 basis points (bps) increase to the policy rate is widely anticipated, lifting it from 3.00% to 3.50%. 

TDS

“We look for a 50 bps hike at this meeting, pushing Bank Rate to 3.50%, with a likely 7-2 vote in favour (Tenreyro and Dhingra are likely to vote for smaller 25 bps hikes, or possibly even for no hike at all; there's a risk Mann votes for 75 bps too). From here, we look for another 50 bps hike in February, and a final 25 bps hike in March, taking Bank Rate to a terminal rate of 4.25%. We expect the MPC to then hold Bank Rate at that level for nearly one year, with the first cut coming in early 2024. We expect QT policy to continue on its current trajectory through 2023 and beyond.”

ING

“Despite higher-than-expected inflation in October, we expect the BoE to revert to a 50 bps hike at its December meeting. Gilts are back to pre-budget crisis levels. They should outperform Bunds but not Treasuries. Sterling has recovered strongly but will struggle to make further gains in a challenging investment environment.”

Danske Bank

“We expect the BoE to revert to a more dovish stance and join the club of 50 bps hikes. We still expect the Bank Rate to peak at 3.75% in February 2023. A slightly dovish BoE and a hawkish ECB should send EUR/GBP higher during the day.”

Rabobank

“We expect the BoE to cap off a tumultuous year with a 50 bps rate increase. That would lift the Bank rate to 3.50%. Two MPC members may favour a smaller rise. We see the central bank continuing to raise rates to 4.75% in the first half of 2023, as spot inflation remains high and the labour market continues to be ‘too’ tight. Central bank tightening will deepen and extend the recession that has already started. We forecast a contraction of -1.1% in 2023 and see no growth in 2024.”

SocGen

“We expect an increase of 50 bps, taking Bank Rate to 3.5%.” 

Deutsche Bank

“We expect the BoE to hike by 50 bps after last month's 75 bps increase, the only one in the current hiking cycle so far, taking the Bank Rate to 3.5%. We also expect the decision to be accompanied by dovish messaging amidst concerns over potential over-tightening. The risks of sticky inflation and wage pressures, among other factors, are expected to lead to a 4.5% terminal rate by May of next year (50 bps in February and 25 bps in March and May). But growth concerns pose downside risks to the expectations.”

BMO

“We look for a 50 bps hike, with a nod to another increase at the next meeting in February, when it will be armed with updated economic growth and CPI projections.”

Citibank

“We expect the MPC to decelerate to 50 bps this week, albeit with a four-way split on the vote. Risks are increasingly skewed towards smaller increments through 2H-2023 as MPC moves from urgent tightening to a more continuous period of economic evaluation.”

Wells Fargo

“We expect the BoE to slow the pace of its rate increase and anticipate a 50 bps hike to 3.50%. Indeed, we see only one further 25 bps hike in early 2023, and a peak policy rate of 3.75% for the current cycle.”

Swedbank

“In our view, a 50 bps hike is the most likely option, reaching a policy rate of 3.50%.”

RBC Economics

“We look for the BoE to revert to a 50 bps hike in December and think the central bank will opt for another 25 bps increase in February before hitting pause on its tightening cycle with the Bank Rate at 3.75%.”

OCBC

“We expect the BoE to raise its bank rate by 50 bps, which will bring it to 3.50%.”

MUFG

“We expect the BoE to deliver a smaller 50 bps and continue to signal that ‘further increases in the Bank Rate may be required for a sustainable return of inflation to target, albeit to a peak lower than priced into financial markets’.”