BoE Could Begin Raising Interest Rates in 2022

The Bank of England (BoE) is expected to begin raising interest rates in the second or third quarter of next year, according to recent forecasts by a number of major banks, Bloomberg reported.

The Bank of America Merrill Lynch (BofA) and Credit Suisse previously ruled out a rate hike before 2023, but now forecast raising rates following the surge in inflation above the 2% target with increasing signs of economic recovery.

HSBC is reportedly also seeing that it is more likely for the BoE to begin a tightening cycle next year.

BoE expects inflation in the United Kingdom (UK) will reach 2.5% in 2021.

Although British monetary policymakers are expecting the surge in consumer prices to be temporary, with the inflation rate meeting its target next year, BoE Governor Andrew Bailey expressed readiness to address sustained inflationary pressures.