NIESR: The Bank of England will hike interest rates in February

Chris Papadopoullos
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NIESR said the Bank of England would start hiking in two months (Source: Getty)

UK interest rates will go up in just two months' time, a think tank has forecast.

The National Institute of Economic and Social Research (NIESR) said today that the economy grew 0.6 per cent in the three months ending November, faster than in the 0.5 per cent it is forecasting for the three months to October.

“This rate of growth is consistent with the continued absorption of spare capacity in the UK economy and our own view that the Bank of England is most likely to begin to increase rates in February 2016,” NIESR said.

A number of economists believe economic growth will head towards a three-month-on-three-month growth rate at the end of the year after cooling off over summer.

However, many economists are pushing their expectations of the first interest rate hike further into 2016. Morgan Stanley yesterday adjusted its rate lift-off forecast to May from February. Economists at Citi said last week that rates may not go up until 2017.

The Bank of England's monetary policy committee voted eight to one to hold the main policy rate at a record low of 0.5 per cent at its last monthly meeting in November.

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