The Bank of England is still expected to raise its benchmark interest rate from a record low of 0.5% early next year, but economists in the latest Reuters poll are now less certain about the timing.
As in all surveys since March, the median in yesterday’s poll of 50 economists said the initial rise of 25 basis points would come in the first three months of 2016, followed by similar moves in the third and fourth quarters.
But financial markets are not fully pricing in the first rate increase until the second quarter of 2016 and over half of the economists polled said their conviction about the timing had decreased over the past month.
“Global risks have elevated over the past month which heightens the chance the first rate hike is delayed,” said Nina Skero at CEBR.
Markets around the world plummeted earlier in the week as a slump in Shanghai shares fuelled worries over China’s economic health and prompted the People’s Bank of China to cut interest rates and lower the amount of reserves banks must hold for the second time in two months on Tuesday
The Fed was seen as near certain to begin tightening policy for the first time in a decade next month but analysts now are waivering on that call, suggesting it might be December or later before rates rise.
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