The results of the survey, published by U.S. bank Citi and market research company YouGov, showed that the annual inflation expectations of the public fell to 3.9% in November and to 3.5% in December from 4.2% in October. Meanwhile, inflation expectations for the next 5-10 years fell to 3.4% from 3.5% in October. For now, the outlook is still that inflation will keep above 2% and that will keep the Bank of England on their toes.
Experts said that the latest survey will form the basis for a debate at the Bank of England on whether to signal a move to lower interest rates. According to forecasts, this week Bank of England policymakers will prefer to keep the interest rate at 5.25% again. Economic data from the UK has been generally weak recently, but economists do not yet consider a rate cut appropriate. GDP numbers were disappointing, December retail sales data was surprisingly weak, and inflation was generally on a downward trend at the end of 2023. Additionally, wages data for November showed slower-than-expected growth in weekly earnings. However, inflation and wages data are still likely too high, according to the Bank of England, with core inflation in December at 5.1% year on year. And while wage growth has slowed, the rate is certainly still high by historical standards. These factors contribute to the forecast that the Bank of England will keep rates unchanged before cutting them by 25 bps at the June meeting. Although the upcoming meeting will most likely not lead to a change in the interest rate, market participants will carefully study the statement for any changes in the "dovish" tone that may signal possible timing of monetary policy easing.