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Two-fifths say lower rates will benefit the economy – BoE
Some 42% of people think lower interest rates will be best for the economy, while 24% believe they should stay where they are, a poll from the central bank found.
The Bank of England’s (BoE’s) quarterly inflation attitudes survey found that this had changed from figures of 41% and 25% previously.
Just a tenth of people felt that interest rates needed to be higher.
On a personal level, 24% of those polled said it would be best for them if interest rates rose, compared to 23% previously. Some 31% felt rates should fall, similar to the 32% who said the same in February.
Respondents expected rates to rise in the future, as 34% said this would go up over the next 12 months. However, the proportion of people who predicted this was smaller than the 36% who said so previously. A quarter of respondents predicted rates would stay the same over the next year.
Some 64% of respondents said interest rates on financial products such as mortgages, loans and savings had increased over the last 12 months, down from 69% previously.
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Just 6% of people felt that interest rates had gone down, which was flat on the share who felt the same in February.
Inflation expectations
Two-fifths – 40% – of respondents said the inflation target was ‘about right’, the same proportion who said so previously.
Meanwhile, 34% of people said the target was too high and a tenth said it was too low.
Looking ahead, the average prediction respondents had for where the inflation rate would be in five years’ time was 3.1%.
In the near term, respondents forecast that the rate of inflation over the coming year would sit at 2.8%.
Respondents did not think the UK’s economy would fare well if prices rose more rapidly, as 65% said it would end up weaker rather than stronger.
The BoE’s Monetary Policy Committee (MPC) will announce the outcome of its next meeting on 20 June. There has been speculation that the central bank might follow in the footsteps of the European Central Bank (ECB), which last week reduced its bank rate for the first time in five years. However, this was recently thrown into question when, this week, the Federal Reserve decided to hold rates as the US’ inflation rate remained stubborn and fell nominally from 3.4% to 3.3% in May.