The Bank of England's Monetary Policy Committee has likely nearly finished with its quantitative easing programme but won't raise interest rates from their record low until at least October next year, a Reuters poll showed.
Median forecasts from the poll of around 60 analysts, taken Nov. 27-Dec. 1, found nearly all of them saying the MPC would not add any additional spending at all, having topped the QE programme up to 200 billion pounds when it met in November.
"They are done with expanding QE. The economy is picking up, financial conditions have improved and inflation is going to continue to overshoot their forecast," said Michael Saunders, head of European economic research at Citi.
Median forecasts see the Bank of England holding its main interest rate at an historic low of 0.5 percent until at least October, a quarter later than in a poll taken last month.
Not one of the economists polled said the bank would announce an increase in spending when it meets next week.
Median forecasts also showed no expectation for any interest rate rises until the fourth quarter of next year, one quarter later than in a similar sized Reuters poll taken just a few weeks ago. Official rates are seen finishing off 2010 at 1.0 percent, also down from a median 1.25 percent in last month's poll.
"(It's) still far too early to be thinking about rate rises," said Colin Ellis at Daiwa SMBC, who sees rates on hold through most of next year.
It also appears that the most aggressive forecasters for QE have lost some of their nerve. The highest forecast had the MPC eventually spending 250 billion pounds, down from the 275 billion pounds maximum seen in a poll taken last month.
Forty-seven economists said 200 billion would be the total, one said 210 billion, five said 225 billion and three said 250 billion. So far, the central bank has only been given permission by finance minister Alistair Darling to spend 200 billon pounds on the asset purchase programme.
Revised data released last week showed the British economy shrank by 0.3 percent in the third quarter, the sixth consecutive quarter of contraction, but slightly narrower than the initial estimate.
Economists expect the economy to have returned to growth in the last three months of 2009, which would mark an official end to the worst UK recession on record.
BoE policymakers Charles Bean and Adam Posen both said last week they thought the economy had bottomed out but that growth would be slow and protracted.
Figures released earlier on Tuesday showed the manufacturing sector continued to grow, albeit slower than expected, while news last week said retail sales rose at their fastest pace in two years and retailers expect a further rise this month.
