UK economy to expand 5.0% in 2022 versus 5.5% September forecast – Reuters poll

“The median of 80 forecasts put 2021 growth at 6.8%, unchanged from September, and 5.0% next year - a downgrade from the previous 5.5% forecast,” per the latest Reuters poll.

The survey results also reiterate that the Bank of England will be the first major central bank to raise interest rates in the post-pandemic cycle but the first hike will not come until early next year, later than markets are pricing in.

Key quotes

Medians in the Oct. 13-20 poll said the bank rate would rise 15 basis points to 0.25% in either February or March although around a fifth of respondents said the initial move would come on Nov. 4, in line with market expectations.

In September, the first hike was not expected until the fourth quarter of next year and, when asked about the risks to their current forecasts, almost 85% of respondents to an additional question said it was more likely the bank acted sooner rather than later than they expected.

Inflation will peak at 4.0% next quarter before falling to 3.5%, 2.7% and 2.2% in the following quarters, the latest poll showed, much higher than predicted a month ago.

GDP was predicted to expand 1.1% this quarter, weaker than the 1.5% expected in last month's poll as a shortage of heavy goods drivers has added to supply chain disruptions.

Also read: GBP/USD steady above 1.3800 amid risk-on sentiment