Hike in Bank Rate off the cards as inflation expectations stay low
The lower readings on inflation are feeding through into people’s short-term expectations for the cost of living and Bank Rate.
The median expectation for the rate of [consumer price] inflation over the coming year was 1.9%, compared with 2.5% in November, according to the Bank of England’s/GfK NOP Inflation Attitudes survey.
Asked about expected inflation in the 12 months after that, respondents gave a median answer of 2.1%, compared with 2.5% in November, the survey results showed.
"North Sea oil companies are suffering, harming jobs and investment"
Rise in interest rates off the cards for now
Commenting on the above data, Rain Newton-Smith, CBI Director of Economics said it is “unlikely” that prices will continue falling for a prolonged period, although “a rise in interest rates anytime soon seems off the cards”.
Newton-Smith also pointed out how, “While lower oil prices are keeping costs down for businesses and consumers, the North Sea oil companies are suffering, harming jobs and investment in the industry. As an immediate step, the Government should announce a commitment to cut back the Supplementary Charge to 20% in the Budget.”
More people expect Bank Rate to stay low
When asked about the future path of interest rates, 39% said rates might stay about the same over the next 12 months, up from 37% in November. The proportion of respondents who now expect rates to rise over the next 12 months dipped to 36%, down from 37% in November.
Respondents were asked to assess the way the Bank of England is ‘doing its job to set interest rates to control inflation’. The net satisfaction balance – the proportion satisfied minus the proportion dissatisfied – was +35%, compared with +29% in November.
GfK NOP interviewed two quota samples of people aged 16 and over in 175 randomly selected output areas throughout the UK; 2094 people between 5 and 10 February and 2018 people between 12 and 17 February. The raw data was weighted to match the demographic profile of the UK as a whole.