The Bank of England has published the results of its latest quarterly Inflation Attitudes Survey, conducted by Ipsos, revealing that public expectations of inflation and interest rates have inched upward since November 2024.
When asked to estimate the current rate of inflation, respondents gave a median answer of 4.9% – a slight increase from 4.8% reported in November 2024.
Looking ahead, inflation expectations over the next year rose to 3.4% (up from 3%), while the outlook for the following year climbed to 3.2% (from 2.8%).
Longer-term expectations, covering a five-year horizon, also nudged up to 3.6% compared to 3.4% in the previous quarter.
ECONOMIC CONCERNS
The survey highlighted persistent economic concerns, with 71% of respondents believing the economy would weaken if prices rose faster, an increase from 66% in November. Only 4% thought the economy would grow under such conditions.
Confidence in the Bank’s inflation target showed a slight dip, with 39% of respondents considering the target ‘about right’, down from 42%. Meanwhile, 33% felt the target was ‘too high’, and 11% believed it was ‘too low’.
INTEREST RATES
On interest rates, the public’s perception of past changes shifted slightly. While 41% of respondents said rates on mortgages, loans, and savings had risen over the past 12 months (down from 45%), those who believed rates had fallen increased to 28% (from 25%).
Looking to the future, 34% of respondents expected rates to rise in the next year, a modest uptick from 33% in November. Conversely, 29% predicted rates would fall (down from 34%), while 23% thought they would remain unchanged.
When asked what would be best for the economy, 11% supported higher rates (unchanged from November), while 38% preferred lower rates (slightly down from 41%). About a quarter (25%) thought rates should stay put.
PERSONAL IMPACT
On a personal level, 26% of respondents felt they would benefit from higher interest rates – a small rise from 24% – while 31% said they would be better off if rates fell (down from 33%).
Finally, public satisfaction with the Bank of England’s handling of interest rates to control inflation showed a slight improvement. The net satisfaction balance – the percentage satisfied minus those dissatisfied – stood at 1%, compared to -1% in November 2024.
