The UK public's anticipations for inflation, especially in the short term, have declined. A recent survey, the results of which will be assessed this week at the Bank of England concerning the potential need for indicating a reduction in interest rates, revealed this trend.
In November, public expectations for inflation over the next 12 months dropped to 3.9%, further decreasing to 3.5% in December from the October figure of 4.2%, as per a survey conducted by US bank Citi and YouGov, a global public opinion and data company.
On top of that, the survey noted a marginal decrease in forecasts for the next five to 10 years in both November and December, experiencing a 0.1 percentage point decline to 3.4% from the October level of 3.5%.
"For now, the longer-term data in particular point to some lingering risks," Citi economist Benjamin Nabarro emphasized.
"However, with inflation now set to fall to 2% in the second quarter, we think the imminent danger is fading. For the MPC (Monetary Policy Committee), we think these data suggest scope for less pervasive inflationary aversion and a more balanced view of the economic risks."
On Thursday, the Bank of England is anticipated to initiate its initial move toward reducing interest rates, currently at their highest level in almost 16 years. This adjustment is prompted by indications of a gradual alleviation in the inflation crisis.
However, although the British central bank might adopt a more accommodating stance regarding potential future cuts, investors are not anticipating any tangible rate reductions in the coming months.
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