Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

One third of Britons see rates rising within a year, says Bank of England survey

34% of respondents expect rates to rise over the next 12 months

City Staff
Friday 06 December 2013 12:25 GMT
Comments

More than a third of Britons expect the benchmark interest rate to increase in the next year, according to the Bank of England’s latest snapshot of inflation attitudes.

Its survey of nearly 2,000 people showed 34 per cent of respondents expect rates to rise over the next 12 months, up from 29 per cent in August, despite the Monetary Policy Committee’s pledge not to consider hikes until unemployment falls to 7 per cent.

The MPC — which monitors inflation expectations in case they feed into higher wage demands — will also be worried by bleaker views on the cost of living. Against a backdrop of rising energy bills, people in the survey sample believe the current rate of inflation is twice as high as it actually is — 4.4 per cent compared with October’s 2.2 per cent consumer prices index reading. Over the next year, respondents expect 3.6 per cent inflation on average, against 3.2 per cent  in August.

The Bank’s official inflation target is 2 per cent.

The MPC will be concerned if inflation expectations show signs of getting out of control as this is one of the three “knockouts” for its forward guidance regime, experts said.

IHS Global Insight’s Howard Archer said: “While the Bank will not be pleased to see a marked rise in the balance of people expecting interest rates to rise ... [it] will likely argue that even more people would be expecting rate rises were it not for forward guidance, given the recent  improvement in the economy.”

--

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in