UK Public Expects Inflation To Hold Steady, Above Target: BOE

-Year Ahead Aug Median Inflation Expectations 2.8%; Unchanged Versus May

By David Robinson

     LONDON (MNI) - The UK public expects inflation to flat-line for a couple of

years at a level markedly above the Bank of England's 2% inflation target, the

latest BOE/TNS survey found.

     In the August TNS survey, conducted for the central bank, Public

expectations for inflation a year ahead were 2.8% and 2.7% for the year after

that before rising to 3.4% in five years' time. These were barely changed from

May, with year ahead expectations back then 2.8% and also 2.8% for two years'

ahead, with five year out expectations at 3.3%.

     The picture that emerges from the BOE survey is that public inflation

expectations have risen as headline inflation has gone up, and that the public

expectations are close to the BOE's own central projections.

     In the August Inflation Report, the BOE forecast that headline CPI

inflation would peak at 2.75% in Q4 this year before dipping but holding above

the 2% target throughout the three year forecast horizon.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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