By Jonathan Cable
LONDON (Reuters) - The Bank of England's view that Britain's main interest rate will have risen to about 2 percent in three years is roughly in line with that held by a majority of economists who took part in a Reuters poll on Wednesday.
But 32 of 38 disagreed with the Bank's assumption that business investment would rise in double digits this year, something that hasn't happened since just before the financial crisis started.
The poll was taken after the BoE pointed to interest rates perhaps starting rising in just over a year as it broadened its guidance on when it will consider the economy to be healthy enough to cope with higher borrowing costs.
Most participants in Wednesday's poll agreed, saying the first move in Bank Rate from its record low of 0.5 percent would not be until next year, with the majority opting for the second or third quarter of 2015. It would be by 25 basis points.
BoE Governor Mark Carney stressed any increases in borrowing costs would be gradual. Medians in the poll suggest Bank Rate would be at 1 percent at the end of next year before gradually rising to 2 percent by the end of 2016.
"They are sincere when they say they are going to do it gradually. It's the only sensible way to do it - if they do it in a more abrupt way they risk upsetting the economy very badly," said Stephen Lewis at Monument Securities.
Growth forecasts over the next three years were revised up sharply in the central bank's quarterly Inflation Report, on the heels of a surprisingly strong rebound last year.
Despite the upturn in growth, 26 of 33 economists broadly agreed with the Bank's assessment that there was enough spare capacity, or slack in the economy, to keep rates on hold without risking a surge in inflation.
"When Bank Rate does begin to rise, the appropriate path so as to eliminate slack over the next two to three years and keep inflation close to the target is expected to be gradual," the Bank said.
Inflation fell to the Bank of England's 2 percent target level in December for the first time in over four years.
The BoE said in August it wouldn't consider raising Bank Rate until unemployment fell to 7 percent - something it didn't envisage for three years - but medians in a Reuters poll on Tuesday suggested it may have already reached that.
Under its revised forward guidance, the Bank will focus on 18 measures of spare capacity in the economy, including business investment and number of hours worked.
Several regular contributors to Reuters polls were unable to take part as they were attending a briefing at the central bank about the new guidance.
(Polling by Swati Chaturvedi and Diptarka Roy)