Public confidence in the Bank of England’s ability to tackle inflation has plummeted according to a fresh survey by… the Bank of England.
The central Bank issued its quarterly poll of public attitudes to tackling inflation as speculation grows that it will hoist interest rates to 5.75 basis points next week, amid out-of-control inflation.
Asked whether the Bank of England is ‘doing its job to set interest rates to control inflation’. the proportion satisfied minus the proportion dissatisfied, was down 13 per cent from -4 per cent in February.
This is reportedly the lowest level since the survey began, while its governor Andrew Bailey has come under increasing pressure to get inflation under control.
Those surveyed were also asked about their views on interest rates and inflation at the moment.
The median response when asked what the inflation rate was 9.6 per cent, while the average expectation of inflation over the coming year was down to 3.5 per cent, from almost four.
Worryingly, 69 per cent said they believed the economy would end up weaker if prices rose faster, while more than a third thought the Bank’s inflation target of two per cent was ‘about right’.
With 12 rate hikes having already taken place since December 2021, 57 per cent expect rates to rise further in the next year, with 16 per cent saying they thought rates should go up, compared to 37 per cent who wanted them to go down.
Traders have been betting that the Bank will have to hike interest rates to their highest level since July 2007, the eve of the financial crisis, in a sign that markets think the UK has the worst inflation problem in the rich world. By doing so, it will surpass the Federal Reserve in its interest rate rise cycle. The European Central Bank raised rates this week, and is expected to make that its final hike.
Conducted by the Bank through Ipsos, respondents were asked about their views on interest rate rises after the Bank’s 12th consecutive hike last month.
The survey took place in mid-May before recent inflation figures from the Office for National Statistics, which recorded inflation fell to 8.7 per cent in April from 10.1 per cent, a slower deceleration projected by the Bank and City. That’s also the highest rate in the G7.
Amid speculation about rates going up for a 13th consecutive time, banks have been raising their mortgage prices, initiated by HSBC. Other banks are now expected to follow suit.