LONDON — Economists expect the Bank of EnglandAs the central bank seeks to control the U.K.’s economy, the central banks will raise interest rates in a series of consecutive increases for the first times since 2004.

The Bank fired the starting gunRate rises were seen in December. The main interest rate was raised to 0.2% from the historic low of 0.1%. Data has been available since then. U.K. inflation soared to a 30-year high in DecemberConsumer prices rose due to higher energy costs and supply chain problems.

It was despite this that the December rate rise occurred. omicron Covid-19 variant spreading rapidly throughout the U.K.It is also threatening economic recovery and destabilization. The Covid outlook has been improving over recent weeks. It is now possible to anticipate a 25 basis-point increase in February.

“If December’s surprise rate hike decision taught us anything, it was, firstly, that the Bank – and especially Governor Andrew Bailey – is clearly worried about elevated rates of headline inflation and the risk of a virtuous wage-price cycle,” James Smith, developed markets economist at ING, said.

Smith stated that high frequency data indicates only a moderate and temporary economic impact of omicron. Accordingly, it is possible to increase the 0.5% rate by 25 basis points.

High that is ‘lesshawkish’

Deutsche Bank anticipates an additional 25 basis point, while senior economist Sanjayraja predicts that the Monetary Policy Committee would vote unanimously for such a move.

Raja wrote in a note on Thursday that “with the Bank Rate at 0.5%, it is reasonable to expect the MPC confirm that all APF reinvestments will stop following the February Decision.”

“The Bank would lose approximately GBP28bn in reinvestments next month (3% of APF), and another GBP 9bn over the remaining year.

Raja believes the MPC will send a primary message that less tightening is necessary in order to maintain stability. Economists are now anticipating inflation reaching 6.5%, and taking longer to moderate. This would keep it above the Bank’s 2 percent target.

Raja stated that “worries about rising wages expectations and services inflation should give the MPC additional ammunition for rate increases over the next few quarters.”

Deutsche Bank anticipates that the MPC will emphasize the broad confidence ranges surrounding the inflation outlook.

The future demand will be affected by an increase in inflation, particularly for energy bills. Raja explained that global growth should be restricted by tightening financial conditions. U.K. demand should decline as well. Ratio rises should cause higher borrowing costs to households and businesses, tempering GDP growth.

We continue to believe that the MPC projects excess supply in the end of its forecast horizon, three years out. Inflation is below the Bank’s target of 2% and unemployment rates are rising as a consequence.

The Bank would be able to keep its message of “modest” tightening. Deutsche expects another 25 basis point hike in August. This will be followed by additional hikes in February 2023/August 2023. This would bring the Bank rate to 1.25%.

BNP Paribas presented its demand for the February hike, moving it from May to Feburary. This is because the Covid situation has improved while inflation continues to heat up. Economists at the French lender don’t believe that MPC messaging will cause additional hawkishness and expect a 25-basis point hike on Thursday.

BNP Paribas economists stated in Wednesday’s note that “By doing so, the monetary policy Committee will kickstart the process of balancesheet reduction.”

“Nevertheless, we believe the MPC may be less hawkish in the next week than its actions alone would suggest, and that they will continue to deliver rate rises at a gradualer pace than was priced into markets.”