September 15, 2023 08:58 GMT
Long-term inflation expectations data marginally encouraging for MPC
- Overall the Bank will probably be marginally encouraged by the fall in long-run inflation expectations with slight disappointment over the rise in expectaions for 1-2 years.
- Inflation expectations over the coming year and the following year edged up a little in the August survey versus the May survey. However, the MPC will be more concerned here with the longer-term inflation expectations - which fell from 3.0% in May to 2.9% in August. That is the lowest level since May 2021, down from a peak of 3.5% in May 2022 and now only 0.3ppt above the long-run average of 2.6%
- 63% of respondents expected further rate rises (up from 57% in May).
- The number of respondents who said rates had risen "a lot" over the past 12 months rose to 65% (from 51% in May).
- The number of respondents saying they were "very dissatisfied" with how the Bank is doing its job rose to the highest number since the survey began in 1999 while net satisfaction fell to its lowest level, too. This probably won't concern the Bank as people are unlikely to be happy while interest rates are rising and inflation is above target - although it will be something the Bank will be hoping will change when inflation gets back closer to target).
- The survey was carried out 4-7 August - so immediately after the last MPR and rate hike.