Public expect rate hike within two years as Bank's Dale says one may come in 2014

The proportion of the public expecting a rise in interest rates has increased significantly according to a new poll by Markit. The poll conducted by Ipsos-MORI between 11-14 October found that 69 per cent of people asked expected rates to rise within two years, a 14 percentage point rise from the previous poll in August.

44 per cent of people believed that there would be a rate rise in the next year, up significantly from the previous 33 per cent.

In August Mark Carney announced the Bank's new policy of forward guidance, saying that interest rates would only rise if unemployment fell below seven per cent, something Carmey forecast is unlikely to happen for another three years.

However analysts and commentators have cautioned that unemployment may fall faster than the Bank predicts.

Paul Ormerod, economist at Volterra Partners, wrote in August:

Once unemployment does start to come down, what does history tell us? Going right back to the late nineteenth century, there are 40 separate instances of unemployment falling by 0.8 per cent. In 32 of these, it took just a single year to accomplish. In another seven, it took two years. In well over a century, the only instance of unemployment taking three years to be reduced by 0.8 percentage points is 1984 to 1987.

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In an interview with the Guardian on Wednesday, MPC member Spencer Dale said a rise could come as soon as 2014:

Conceivably it could be 2014. But it would have to be in a world where you had quite strong growth, perhaps stronger than you have got now, and a recovery in productivity weaker than I would expect.