LONDON, Sept 13 (Askume) – Next week policymakers willBritish public expectations for inflation in the coming year fell to a three-year low in August ahead of an interest rate decision , a Bank of England survey showed on Friday.
The central bank pays close attention to surveys of public inflation expectations to guide future inflation trends.
On 1 August, when the Bank of England’s Monetary Policy Committee cut interest rates to a 16-year high of 5.25%, it said the recent drop in inflation expectations would lead to a slowdown in future wage demand and a slowdown in corporate economic growth.
The Bank of England’s quarterly Inflation Outlook survey showed that inflation expectations for the next 12 months fell to 2.7% in August, the lowest since August 2021, from 2.8% in May.
Expectations for the next 12 months remained unchanged at 2.6%, while expectations for the next five years rose from 3.1% to a nine-month high of 3.2%.
The survey was conducted among more than 2,000 people aged 16 to 75 between August 2 and August 6, following the latest rate cut.
Economists polled by Askume this week expect the Bank of England to keep interest rates unchanged at 5% on Sept. 19 but cut them to 4.75% after its next meeting on Nov. 7.
Consumer price inflation returned to the 2% target in May and June, but rose to 2.2% in July , and the Bank of England forecasts it will rise to 2.75% by the end of the year before falling further.
The Bank of England’s measure of public satisfaction with inflation control, which tracks recent inflation, rose from -4 in May to +4 in August. That’s the highest level since February 2022, when Russia’s full-scale invasion of Ukraine caused energy prices to soar across much of Europe.
