First BoE rate hike of 25 basis points still expected in first quarter 2016

The Bank of England will begin tightening policy early next year according to economists in a Reuters poll who are still largely clinging on to expectations for a first quarter hike from record low interest rates.
That prediction comes just a week after the central bank cut its forecasts for economic growth over the next three years. This backed bets in financial markets it will only start to raise interest rates in around a year's time.
British rates have sat at just 0.5 percent for over six years and the median in the poll of around 50 economists, taken in the past week, still said the initial move of 25 basis points higher would come in the first three months of next year, the same as in last month's poll.
But as a group, contributors gave only a 60 percent probability of a hike before April and 12 said they were less confident about their predictions. Of those 12, all but one said the risk was that the rise would come later than they thought.
Less than a year ago the Bank of England was widely expected to be the first major central bank to begin tightening policy but predictions as to when the Monetary Policy Committee would begin hiking rates have moved steadily into the future.
"After last week's election of a fiscally austere Conservative government and yet another Inflation Report that showed the MPC had little urgency to raise rates, we have changed our call on the Bank of England," Neville Hill at Credit Suisse wrote in a note to clients on May 14.
Hill now agrees with the consensus although eight economists surveyed still expect the first increase to come this year.
What the poll does make clear is that when the Bank does act it won't be moving very fast. Medians suggest Bank Rate will only be at 1.25 percent at the end of next year and a still historically low 2.00 percent when 2017 finishes.
Like other central banks around the world the BoE has been put off from tightening policy after a fall in oil prices made it virtually impossible to get inflation anywhere near targets.
The BoE wants prices to be rising at a two percent a year rate but official data earlier on Tuesday showed they actually fell 0.1 percent last month - the first negative reading since 1960 - and medians in the poll suggest it won't reach target until October 2016 at the earliest.