Economists recently polled by Reuters indicate another rate hike coming up by the BOE in February to combat the surge in inflation across Britain even as the government revises the threat from the Omicron variant lower. The BOE was the first among major central banks to announce a rate hike since the beginning of the pandemic amid rising inflationary pressures.

Earlier this week, UK’s inflation report revealed that it had risen to the highest levels seen in almost three decades during December. Analysts expect inflation to continue climbing higher through this quarter until it peaks in Q2 2022 and gradually eases lower in Q3 this year.

However, economists expect inflation to ease back down to BOE’s target of 2% only by Q2 2023. This could force Britain’s central bank to implement a rate hike in next month’s meeting even as the nation reports a spike in COVID-19 cases due to the Omicron variant of the virus.

Respondents to the poll have revised their inflation forecasts higher for the current and following quarters, expecting them to come in at 5.2% and 5.5% respectively. In the previous edition of the poll held in December, inflation expectations stood at 4.7% in Q1 2022 and 4.6% in Q2.

For now, markets have assigned an 85% likelihood that the BOE could hike interest rates to 0.50% in February. Meanwhile, nearly 65% economists anticipate a rate hike next month while over 75% expect a rate hike to 0.50% by the end of March.