Despite the economy entering a recession, the Bank of England will increase Bank Rate by another 50 basis points, bringing borrowing costs to 3. 50% in an effort to combat inflation that is currently running at more than five times its target, according to a Reuters poll.
Following the change, the BoE will increase rates by an additional 50 bps in the first quarter and 25 bps in the second, with medians predicting that the bank rate will peak at 4.25% at that time.
There was significant disagreement among economists regarding when and where the bank rate would level off in the most recent survey, which was conducted after the bank rate was predicted to peak at 4.25% next quarter.
Next, it will shrink by 0.4%, 0. 4%, and 0. 2% over the first three quarters of 2023. Across this year the economy was predicted to expand 4. 4% but then contract 0.9% next year before returning to 0. 9% growth in 2024.