The results of the Bank of England's latest quarterly survey of public attitudes to inflation showed that median expectations of the rate of inflation over the coming year were 3.9%, down from 4.8% in November 2022, when the previous survey was conducted. Meanwhile, inflation expectations for the next 12 months, which are closely monitored by the Bank of England's policymakers, fell by 0.4% to 3.0%. Five-year inflation expectations of consumers also decreased relative to November - to 3% from 3.3%.
The survey also found that 38% of respondents considered the inflation target to be ‘about right’, compared with 35% in November. The proportion of respondents who considered the inflation target "too high" or "too low" was 29% and 14%, respectively.
Regarding the outlook for the Bank of England's monetary policy, 58% of respondents expected a rate hike over the next 12 months, compared with 74% in November. 21% of respondents said they expect rates to remain roughly at the same level over the next 12 months, up from 11% in November.
When asked what would be "better for the economy" - higher interest rates, lower rates or unchanged rates — 16% of respondents said that rates should "rise", compared with 20% in November. 33% of respondents believed that rates should "fall", compared with 30% in November. Meanwhile, 27% of respondents said that interest rates should "remain at the same level", compared with 25% in November.