Britons increasingly see rate hike coming in next 12 months - Bank of England

LONDON, June 6 Fri Jun 6, 2014 9:34am BST

Pedestrians walk past the Bank of England in the City of London May 15, 2014. REUTERS/Luke MacGregor

Pedestrians walk past the Bank of England in the City of London May 15, 2014.

Credit: Reuters/Luke MacGregor

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LONDON, June 6 (Reuters) - Britons' expectations for an interest rate hike over the next year continue to edge up even though their inflation forecasts have fallen, a poll commissioned by the Bank of England showed on Friday.

The BoE's quarterly May inflation attitudes survey showed that 42 percent of Britons expect a rate rise over the next 12 months, the highest proportion since May 2011, versus 40 percent in February.

Inflation expectations over the next year fell to 2.6 percent, the lowest level since February 2010, compared with 2.8 previously.

Britons also cut their outlook for inflation for the next two and five years.

The inflation figures are likely to bolster the Bank of England's message that it is in no rush to raise interest rates.

But the survey showed one in five respondents thought higher interest rates would be best for the economy, compared with 16 percent in February's poll.

The BoE stuck to its plan to nurse the economy back to full health with record low interest rates on Thursday, despite a strong recovery and fast-rising house prices which could lead to a split among its policymakers soon.

The BoE thinks there are still enough people out of work or seeking more work to allow the recovery to continue without pushing up inflation.

Forecasts from the Bank published in May showed that gradual interest rate rises starting in about a year's time would be consistent with its 2 percent inflation target.

Consumer price inflation rose to an annual rate of 1.8 percent in April, from 1.6 percent in March, which had been its lowest level in more than four years.

A separate question in the survey showed that public confidence in the BoE doing its job to control inflation had risen slightly compared with February.

The survey was carried out for the BoE by polling company GfK NOP, which surveyed 1,986 people between May 8 and May 13.

(Reporting by Andy Bruce and Jack Stubbs)

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