UK inflation expectations ease as BoE considers next rate hike

LONDON, May 1 (Reuters) – Inflation expectations in Britain eased in April, Citi bank said on Monday, offering some relief to the Bank of England, which is expected to announce a 12th successive rate hike next week. and investors are betting on further rises after that.

Citi said its monthly survey by market research firm YouGov showed public expectations for 12-month inflation fell to 5.2% in April from 5.4% in March and expectations for the next five to 10 years fell to 3.6% from 3.7%.

Citi economist Benjamin Nabarro said the problem of Britain’s high inflation – the country’s main measure of consumer price growth remains above 10% – was reflected in the findings that held up well for above pre-pandemic ranges,” the report says.

“However, today’s data still suggests that overall UK inflation expectations remain anchored at levels consistent with target,” Nabarro said.

“With acute food shortages and inflation primarily responsible for recent volatility, we believe the risks around these data are more likely to abate in the coming months rather than intensify further.”

The BoE is widely expected to raise borrowing costs again on May 11 after its monthly policy meeting, with inflation five times its 2% target.

Investors are putting a 92% chance of a 25 basis point increase in the bank rate to 4.5% and about a 50% chance of hitting 5% in August.

Reporting by Muvija M; Edited by Kate Holton

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