2017.11.0201:16:00UTC+00Bank Of England Set For First Rate Hike In A Decade

The Bank of England is widely expected to lift its key rate for the first time in a decade despite Brexit uncertainties, as inflation continues its upward trend on a weaker pound and the growth momentum looks set to run out of steam in coming months.

The Monetary Policy Committee, headed by Governor Mark Carney, is forecast to raise the benchmark rate by 25 basis point to 0.50 percent. The decision is unlikely to be unanimous.

The previous change in the rate was a quarter-point reduction in August 2016 after the Brexit vote.

The policy announcement is due at 8.00 am ET on November 2, dubbed "Super Thursday". The bank is also slated to release its latest Inflation Report along with the MPC decision.

Central bank rhetoric over the past few months suggested that more rate-setters are favoring an imminent hike given the high inflation. However, they would be hesitant due to the Brexit uncertainties that complicate the picture as there remains the risk that a hike now may have to be reversed in the immediate future.

At the September meeting, some members said a withdrawal of part of the stimulus injected in August last year would help to moderate the inflation overshoot.

A rate hike would help to strengthen the pound and in turn combat inflation, but such a tightening is likely to weigh on investment.

The nine-member MPC is expected to maintain the asset purchase programme at GBP 435 billion.

The National Institute of Economic and Social Research said on Wednesday that the BoE would lift the policy rate by 25 basis points this month and again every six months until it reaches 2 percent.

Inflation rose to 3 percent in September, the highest since 2012, and well above the bank's 2 percent target.

At the Treasury Committee hearing in September, Carney said it is more likely than not that he will write an open letter to Chancellor Philip Hammond, explaining why inflation exceeded the target by one percentage point.

Although the ONS data showed an improvement in quarterly GDP growth to 0.4 percent in the third quarter from 0.3 percent in the second quarter, the outlook remains clouded by the heightened uncertainty from Brexit.

The central bank expects the UK to lose up to 75,000 jobs in financial services after the country leaves the European Union, BoE Deputy Governor Sam Woods told a parliamentary hearing on Wednesday.