The central bank’s Attitude Survey found this was marginally higher than the 33% who said the same at the time of the last poll in November.
Some 23% expect interest rates to stay the same, a slight change from 22% previously, while the proportion of people who think they will decline in a year’s time shrank from 34% to 29%.
When asked what would be best for the economy, just 11% said higher interest rates, unchanged since the November survey. The share of people who said lower interest rates would benefit the economy dropped from 41% to 38%, and a quarter said they should stay where they are, down from 27% previously.
A slightly larger share of people felt higher interest rates would benefit them personally, rising from 24% in November to 26% in the recent survey. Some 31% wanted interest rates to fall, down from a third the last time the question was asked.
Fewer people noted a rise in interest rates on things like mortgages, bank loans and savings over the last 12 months, with 41% noting an increase. This was down from 45% in November.
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Some 28% felt that interest rates had fallen, up from a quarter previously.
Misapprehension of interest rates and inflation
When asked what the current inflation rate was, respondents gave a median answer of 4.9% up from 4.8% in November.
The inflation rate in January was recorded at 3%.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “People tend to overestimate how high inflation is and underestimate how low interest rates are on savings and borrowing.
“It’s not a huge shock; they have busy lives and keeping on top of these things isn’t a huge priority. However, if you’re too far off, you could be in for a nasty surprise.”
Coles said people were aware that inflation had fallen, but did not know how far.
She added: “Meanwhile, when asked to estimate what’s happening with savings and mortgage rates, they assume rates have risen – when, in reality, they have actually fallen a little.”
For the year ahead, the median expectation for the inflation rate was 3.4%, up from a prediction of 3% in November.
For the 12 months after that, respondents said inflation would be at 3.2%, up from the previous forecast of 2.8%.
Some 71% of people said the UK economy would be weaker if prices rose faster, compared to 4% who said it would strengthen.
Coles said this misconception of inflation could pose a risk to people’s finances, saying savers might not realise they could shop around and get a better interest rate and if they expect rates to rise in the future, they could leave money in an easy-access account.
She added: “If they have a mortgage, meanwhile, they may not appreciate how rates have been falling. Between February last year and this year, the average two-year fixed rate mortgage deal has fallen from 5.63% to 5.52%.
“Those with a remortgage looming could end up rolling onto a standard variable rate if they assume fixed rates are still back at the levels we saw a year ago, and stick their head in the sand. This will hit those with the biggest loans the hardest.”
