UK public’s inflation expectations hit highest in years: BoE survey

LONDON (Reuters) – The British public’s expectations for inflation over the medium term rose to their highest in more than two years, and Britons also expect a faster pace of interest rate rises, a Bank of England survey showed on Friday.

The poll showed that expectations for inflation over the next two years rose to 2.9 percent from 2.7 percent, while for five years ahead expectations rose to 3.5 percent.

Last month the BoE raised its key interest rate for the first time in more than a decade and said further, very gradual, rate increases were likely over the next couple of years.

Now 63 percent of the public expect interest rates to increase over the coming year, up from 42 percent at the time of the last BoE survey in August.

Consumer price inflation held at a five-year high of 3.0 percent in October and the BoE forecasts it will only fall slowly.

A similar survey by polling company YouGov for Citi showed last week that Britons’ inflation expectations for the year to come had fallen to 2.6 percent in November.

Expectations for inflation over the next five to 10 years held at 3.2 percent, its joint-highest level since 2014.

The BoE survey was based on polling of 2,097 people between Nov. 3 and Nov. 7, and was conducted by market research company TNS.

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