LONDON (Reuters) -Longer-term inflation expectations among the British public have risen this month, according to a survey published on Friday by bank Citi and opinion poll firm YouGov that underscores why the Bank of England is moving cautiously with interest rate cuts.
The survey’s measure of inflation expectations in five to 10 years’ time – which are closely watched by the BoE – rose to 4.1% in September, up from 3.9% in August but below July’s 4.2% and June’s 4.3%.
Short-term inflation expectations were unchanged for a third month in a row at 4.0%.
Citi said the increase in the longer-term series was echoed in other surveys including the BoE’s own monthly sampling of views among businesses.
Earlier this month the British central bank held its benchmark Bank Rate at 4% and suggested it might slow its pace of reductions in borrowing costs in the months ahead given the persistence of inflation pressures in the economy.
Britain’s headline inflation rate rose to 3.8% in August and was the highest among the Group of Seven economies. The BoE has forecast that it will peak at 4% in September, double its 2% target, and only return to 2% in the spring of 2027.
(Reporting by William James and William Schomberg; Editing by Alistair Smout)
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