The BoE’s February inflation attitudes survey showed that average public inflation expectations for the next 12 months ticked up to 3.6% in February compared to 3.5% in the November poll. That is the highest expected rate since May.
At a two-year horizon, Britons expected inflation of 3.4% – also the highest since May – compared to the 3.2% they forecast three months ago. In five years’ time they saw inflation at 3.6%, unchanged from November’s prediction. This rate is the highest cited since the question was first asked in February 2009.
The figures are likely to concern members of the BoE’s Monetary Policy Committee, who on Thursday opted against pumping more stimulus into the fragile economy in what was probably a close-run decision.
Last month, three central bankers – including Governor Mervyn King – voted to buy a further 25 billion pounds of British government bonds. Since then economic news has painted a picture of an economy on the verge of a third recession since 2008, but for the majority of MPC members persistently above-target inflation is likely to have been a major argument against another monetary boost.
Britain’s inflation held at 2.7% for the fourth consecutive month in January, remaining at its highest level since May, and the central bank forecasts it will exceed its 2% target until 2016.
The survey was carried out for the BoE by polling company GfK NOP, which surveyed 3,896 people between February 7 and February 19. Despite the prolonged inflation overshoot, net public satisfaction with the BoE rose to +17 from +12 in November, hitting the strongest in a year, according to the survey.
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