Nearly half of Britons expect rate hike in next 12 months: BoE survey

12 Sep, 2015 11:24 am

LONDON – People in Britain are increasingly heeding the message from Bank of England Governor Mark Carney that the time is coming for a first increase in interest rates since before the financial crisis.

A survey by the central bank published on Friday that showed that proportion of Britons expecting rates to increase over the next year, minus those who expected a rate cut, rose to 46 percent, up from 33 percent in May.

That was the highest level of expectation about a rate hike since May 2011, the BoE said.

Despite near-zero inflation, Carney has said a decision on whether to raise rates will become clearer around the turn of the year.

Economists polled by Reuters predict the BoE will keep rates at a record low until the first quarter of next year as it seeks to ensure that a recovery in earnings is entrenched.

The BoE survey showed the public expected inflation in 12 months time would stand at 2.0 percent compared with a forecast of 2.2 percent in May’s survey.

Inflation expectations for two and five years ahead were unchanged at 2.3 and 2.8 percent respectively.

The survey also showed that British perceptions of inflation were out of sync with official data. Asked what the current rate of inflation is, the median response was 2.1 percent. The official consumer price index for July stood at just 0.1 percent.

A separate Yougov/Citi survey, published in late August, showed the public’s expectations for inflation in the next 12 months fell back this month after hitting an eight-month high during July. -Reuters

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