Inflation expectations hold steady at 3.6 percent in May

LONDON Fri Jun 7, 2013 9:33am BST

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LONDON (Reuters) - Britons expect the same rate of inflation over the coming year as they did three months ago, a Bank of England survey showed on Friday.

The quarterly survey showed average public inflation expectations for the next 12 months held at 3.6 percent in May, well above the central bank's 2 percent inflation target.

At a two-year horizon, Britons expected inflation of 3.3 percent, and in five years time they saw inflation at 3.6 percent, also little changed from February.

The figures may disappoint members of the BoE's Monetary Policy Committee given consumer price inflation has eased to 2.4 percent and some private surveys have shown a modest easing in inflation expectations.

Inflation has been above target for much of the past five years and some policymakers are concerned that a cycle of fast price rises and expectations of more to come may become entrenched.

The central bank decided against any further monetary stimulus at its meeting on Thursday.

In recent months, those opposing further stimulus have cited inflation expectations as one reason not to pump more money into the economy, alongside a more general view that past stimulus was still boosting growth.

The survey was carried out for the BoE by polling company GfK NOP, which surveyed 1,964 people between May 9 and May 14.

(Reporting by Christina Fincher and Rosalba O'Brien)

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