SocGen: Bank of England will raise rates by at least 1% in 2011
“There is an urgency there, if the market starts to worry that we are going to lose the credibility of the target,” London-based Hilliard said in a telephone interview today after changing his rate forecast late yesterday. “To start the ball rolling, they need to do something that is more substantial.”
He sees policy makers raising the benchmark interest rate by 0.5 percentage point in August and again in November. That compares with a previous prediction that they would leave the rate at a record low of 0.5 percent until the second quarter of 2012. The central bank has never increased the rate by more than 0.25 percentage point. BNP Paribas SA and Citigroup Inc. today revised their Bank of England interest-rate forecasts.
Inflation quickened to 3.3 percent in November and the central bank forecasts it will remain above its 2 percent target through 2011. The Monetary Policy Committee has split three ways in the past three months on whether to raise rates to combat price pressures or add stimulus to aid economic growth.