December 11, 2015 / 9:37 AM / 4 years ago

Number of Britons expecting BoE rate rise falls to two-year low

LONDON (Reuters) - The number of Britons expecting the Bank of England to raise interest rates in the next 12 months has fallen to its lowest in two years, a central bank survey showed on Friday.

Just 35 percent of Britons polled in the days after it released a relatively dovish set of economic forecasts last month expected a rate rise in the next 12 months, down from a four-year high of 50 percent in August.

Britons’ inflation expectations remained steady despite a fall in headline inflation to below zero, with survey respondents on average expecting inflation to be 2.0 percent over the next year.

“This shows that the public believes that the BoE is still capable of achieving its mandate and hence the risk of protracted low inflation is not yet a serious one,” Kallum Pickering, economist at Berenberg, said.

On Thursday, the BoE suggested it remains unhurried about raising interest rates, pointing to a new fall in oil prices and slower wage growth as it kept borrowing costs at the record low where they have sat since 2009.

The proportion of survey respondents who had “no idea” where interest rates are heading over the 12 months rose to the highest level on record, perhaps reflecting shifts in tone from BoE policymakers about the outlook for British interest rates.

BoE Governor Mark Carney has previously said the decision on when to raise rates was likely to come into “sharper relief” around the turn of the year. But more recently, he has said the bank will move when the time is right.

Carney’s earlier messages about the possible timing of a rate hike were knocked off course by surprises such as the plunge in oil prices last year.

Editing by Janet Lawrence

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