The Bank of England is likely to voice deep concern about the rise in inflation on Thursday but keep interest rates at a record low as a wave of Omicron coronavirus infections engulfs the UK, according to economists.
Although there has been a flurry of speculation in financial markets that the BoE’s Monetary Policy Committee might bite the bullet at midday and raise rates from 0.1 per cent to 0.25 per cent, most economists believe the majority of members will vote to hold fire.
Even the most hawkish members of the committee, including external member Michael Saunders, have suggested in the past that the new facts surrounding the virus might require a pause for additional thought.
With the labour market tight and inflation in November at 5.1 per cent, its highest level for a decade, the IMF has told the central bank to act and avoid “inaction bias”, but economists lined up on Wednesday to say the BoE would hold tight.
Krishna Guha at Evercore ISI said he was confident the BoE would delay a rate rise, which would “reflect the higher bar for rate tightening rather than…
