A third of people believe interest rates will be higher in 12 months’ time, a consumer poll revealed.
The quarterly Inflation Attitudes Survey from the Bank of England and Ipsos found that this was higher than the 29% who felt the same in the last survey in August.
Just over a fifth – 22% – expected interest rates to stay the same, unchanged since the last survey.
When asked whether higher, lower or unchanged interest rates would be best for the economy, 11% said rates should go up, compared to 9% in August.
Some 41% said lower interest rates would be best for the economy, similar to 42% previously, while 27% said they should stay where they are, compared to 28% in August.
As for what would be best for people personally, 24% said higher interest rates, which is relatively unchanged from the 23% who said the same in the last survey. A third said it would be better for them if rates went down, unchanged from the previous survey.
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According to the survey, 45% of people had seen interest rates on mortgages, bank loans and savings accounts rise in the last 12 months, down from the 55% who said the same in August.
Meanwhile, a quarter of respondents said rates had fallen over the last year, up from 11% previously.
Higher inflation and a weaker economy
The survey revealed people expected the economy to weaken as inflation rose.
When asked to predict the rate of inflation in the coming year, the median response was 3%, up from a prediction of 2.7% in August.
For the 12 months after that, respondents said inflation would sit at 2.8%. This was higher than the prediction of 2.6% made in August. In the longer term of around five years, the expectation was for inflation to be 3.4%, up from a prediction of 3.2% in August.
Over two-fifths – 42% – of respondents said the inflation target was ‘about right’. This was slightly down from the 45% who said the same in the last survey.
A third said the 2% inflation target was too high, while a tenth said it was too low.
Two-thirds of respondents said the economy would be weaker if prices started to rise faster, outweighing the 6% who said it would be stronger. This was fairly unchanged from the split of 67% to 5% in August.
