Bank of America and Credit Suisse believe that the UK will implement the first rate hike since the outbreak of the epidemic earlier than previously anticipated.

The two banks thought earlier that the Bank of England would not act until 2023, but now they expect to raise interest rates for the first time in the second and third quarters of next year, respectively. Earlier, the UK's inflation rate unexpectedly soared, breaking the central bank's 2% target for the first time in nearly two years. At the same time, the economy is growing at an accelerated pace, creating more jobs.

After the UK economy experienced its worst recession in 300 years, this forecast reflects optimistic expectations for a rapid recovery. Bank of England policymakers slowed the pace of economic stimulus last month, and may suggest how fast policies will be tightened after next week's meeting.

The Bank of England said that it expects the inflation rate to reach 2.5% this year and then fall back to the target level, but Bank of England Governor Bailey said that if there is evidence that inflation continues to rise, he is ready to tighten policy.

Chris Hare, a senior economist at HSBC, the UK's largest bank, wrote in a report on Thursday that the economic outlook “is in line with the heightened risk of interest rate hikes in the UK next year.” Credit Suisse and Bank of America also joined the ranks on Friday, believing that interest rates will be raised next year.

“The Bank of England believes that potential inflationary pressure is limited in the near future because the unemployment rate is expected to rise this year with the end of the job support program in September 2021,” Sonali Punhani, an economist at Credit Suisse, wrote on Friday. “Our views are more hawkish. We believe that the conditions for tightening policies can be met sooner.”

Credit Suisse raised the forecast for UK GDP growth in 2021 from 6.5% to 7.5%, and the inflation forecast from 1.7% to 1.8%.

The Bank of America expects the Bank of England to begin quantitative austerity soon after the first rate hike in the summer of 2022 or spring 2023.