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UK inflation expectations fall again as BoE nears rates decision
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LONDON (Reuters) – The British public’s expectations for inflation fell again in July, a survey showed on Monday, potentially adding to the case for the Bank of England (BoE) to increase interest rates by only a quarter percentage point later this week.
LONDON (Reuters) – The British public’s expectations for inflation fell again in July, a survey showed on Monday, potentially adding to the case for the Bank of England (BoE) to increase interest rates by only a quarter percentage point later this week.
U.S. bank Citi and pollsters YouGov said expectations for inflation in five to 10 years’ time dropped to 3.8% in July from 4.0% in June, the third fall in the last four months.
Inflation expectations for 12 months’ time edged down to 6.0% from 6.1%, the survey showed.
The BoE’s Monetary Policy Committee (MPC), which has raised interest rates steadily since December to fight an inflation rate now above 9%, has said it is ready to act forcefully if needed to stop the recent price surge from becoming embedded.
That has raised the prospect of the first half percentage-point BoE rate hike since 1995 as soon as Thursday, after its August policy meeting.
“For the MPC, these data (alongside recent developments) are likely to mean concerns surrounding medium-term inflation expectations remain,” Benjamin Nabarro, an economist with Citi, said in a note to clients.
“However, we see little in today’s data that should provide a further impetus for an out-sized hike this week.”
(Writing by William Schomberg; Editing by Kylie MacLellan and Christopher Cushing)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or the Producer Price Index (PPI).
Interest rates are the amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal. They can influence economic activity and inflation.
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, maintaining monetary stability, and overseeing the financial system.
The Monetary Policy Committee (MPC) is a group within the Bank of England that meets regularly to set interest rates and make decisions regarding monetary policy to achieve economic stability.
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