Get Ready for More BOE Hikes Says Economist Who Called 2017 Move

(Bloomberg) -- One of the first economists to correctly predict that the Bank of England would hike interest rates in November is telling clients to prepare for a faster pace of increases over the next two years.

Nomura's George Buckley is forecasting the bank will raise rates four times by the end of 2019 to keep inflation in check -- double the consensus among economists and investors.

Buckley broke from the pack in June last year to predict the first BOE hike in more than a decade would come in August -- a call that ultimately was three months too early. When that meeting passed without an increase, he switched his forecast to November long before it became a near universally held view.

“The Bank of England will once again show inflation well above its target” in the February update of its forecasts, Buckley said. “With the financial markets pricing in less than a single hike this year and less than two hikes in total by end-2019, we think there is room for the short-end to sell off in the coming months.”

Since last year's increase to 0.5 percent, BOE officials have said two more interest-rate hikes will probably be needed to get inflation back to target over their three-year horizon.

The caveat to that outlook is Brexit. Governor Mark Carney and several of his rate-setting colleagues have said that the impact of leaving the European Union could prompt a rate move in either direction.

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net.

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint, Lucy Meakin

©2018 Bloomberg L.P.