(Bloomberg) -- The Bank of England will hold off increasing interest rates next week and cut its forecasts for both growth and inflation, according to economists surveyed by Bloomberg.
Just three out of the 54 banks questioned expect a rate hike at the May 10 meeting, compared with about three-quarters of those asked last month. The survey also showed economists are unanimous in predicting officials will lower their growth outlook for 2018, with none expecting any upgrade to GDP or inflation through 2020.
The survey results underscore the abrupt turnaround in expectations for both the BOE’s May meeting -- which until recently was almost universally seen as nailed-on for a rate hike -- and the longer-term outlook for the U.K. economy.
Since early April, when Bloomberg’s last survey was carried out, the nation has seen weaker-than-expected growth and inflation figures, as well as a warning from BOE Governor Mark Carney that a May hike was far from certain. While bad weather played a part in the disappointing data for the early part of 2018, the underwhelming run has continued, with reports suggesting that economic expansion remained subdued at the start of the second quarter.
Traders have also slashed their bets on a May move, with the implied probability of an increase now below 10 percent, down from more than 90 percent at the end of March. At the upcoming meeting most economists expect a repeat of March’s 7-2 vote in favor of maintaining rates at 0.5 percent -- with Ian McCafferty and Michael Saunders likely dissenting once again in favor of an increase.
Should officials downgrade their growth outlook in next week’s Inflation Report, it would mark a climb-down from their last forecast round in February, when they upped their prediction for expansion to 1.8 percent for this year and next.
While they lowered their first quarter estimate to 0.3 percent in March, due to disruption from the so-called “Beast from the East” snowstorm, even that proved too optimistic relative to the initial reading of 0.1 percent.
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