The BoE has long been criticized for its efforts to steer market expectations for interest rates. AFP / Daniel LEAL-OLIVAS
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The Bank of England has a problem. It is poised to raise interest rates for the first time in a decade Thursday, with the hike expected to be from 0.25 to 0.5 percent. Carney thinks leaving the EU will reduce the speed limit on how fast the economy can grow without pushing up inflation, which has hit a five-year high of 3 percent, above the BoE's 2 percent target.In other words, higher rates will be needed even if growth is weak, although they are unlikely to return to prefinancial crisis rates of around 5 percent for the foreseeable future.Financial market expectations for interest rates, measured by overnight index swaps, assign an almost 90 percent chance of a 25 basis-point hike Thursday.Markets had not been expecting a rate rise before 2019 but shifted fast to focus on November.Most do not expect another one next year: The poll's consensus shows the rate is likely to be stuck at 0.5 percent until mid-2019 . Seventy percent said even one rate rise now would be a mistake.
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