LONDON: The Bank of England (BoE) will wait until early next year before raising borrowing costs, later than previously expected, as it awaits further information on the economic impact of the new Omicron coronavirus variant, a Reuters poll found.

       In a November poll, a slim majority of economists expected a rise from 0.10% to 0.25% on Dec 16.

       But since then policymaker Michael Saunders, who voted for an interest rate hike last month, said he wanted more details about the new variant before deciding how to vote this month.

       “While the Dec 16 meeting has looked like an incredibly close call at times, we think the Monetary Policy Committee will vote unanimously to keep rates on hold, amid the considerable uncertainty around the Covid-19 situation,” said Elizabeth Martins at HSBC.

       “One of the reasons we have been saying since the summer for why February is the earliest likely time for a hike is because of the risk of a winter wave of Covid-19 weighing heavily on economic activity.”

       Coronavirus cases in Britain, and across much of the world, have been rising and the government announced it would reimpose some restrictions late last month to try to contain the spread of the Omicron variant, which may be more resilient to vaccines.

       Even tougher measures were introduced on Wednesday, after the polling was conducted, ordering people to work from home, wear masks in public places and use vaccine passes to enter venues with large crowds to try to slow the variant’s spread.

       Despite restrictions, the economy was still expected to expand 1% this quarter but slow to 0.8% next quarter and to 0.7% in the second quarter. Across 2022 annual growth was put at 4.8% and for 2023 it was 2.1%.

       “Covid-19 cases will rise month-on-month in both December and January, keeping many households cautious. Near-real-time data continue to suggest Omicron already has dealt a blow to the consumer services sector,” said Samuel Tombs at Pantheon Macroeconomics.

       Last month, the bank surprised markets, which had priced in a rise, by leaving interest rates on hold. Market pricing is now showing a roughly 50%-50% chance of a move this month.

       In the Dec 6-8 poll, 25 economists said bank rate would be left at 0.10% next week, while 21 predicted a rise to 0.25%. In the November poll the split was 26 in favour of a hike versus 21 expecting no change. — Reuters