(Adds detail, background)
By David Milliken
LONDON, Dec 14 (Reuters) - The British public's expectations
for inflation over the next five to 10 years edged up this month
to their joint-highest level in eight years, according to a
survey on Tuesday from U.S. bank Citi and polling company
YouGov.
In news that may discomfit the Bank of England as it decides
whether to raise interest rates on Thursday, long-term inflation
expectations rose to 3.8% in December from 3.7% in November.
This matches September's reading which was the highest since the
third quarter of 2013.
Expectations for 12 months' time held unchanged at 4.0%.
Both measures are well above their long-run averages, Citi said.
Citi said it did not believe these data alone would be
enough to prompt the BoE to raise interest rates on Thursday,
given the central bank's concern about the Omicron coronavirus
variant.
"Instead, we expect some upward pressures here to keep the
Bank on course for a rate hike - most likely in February," its
economists wrote in a note to clients.
Some BoE policymakers place greater weight on long-term
measures of inflation expectations - which might suggest the
public is losing faith in the BoE's ability to hits its 2%
inflation medium-term target.
Short-term measures of inflation expectations are more
influenced by the latest inflation data, and Citi said they had
fallen since the end of fuel shortages in October.
Consumer price inflation hit a 10-year high of 4.2% in
Britain in October and economists polled by Reuters expect
November data due for release on Wednesday to show inflation
rising further to 4.7%.
Citi said it expected inflation to reach as high as 6.4% in
April 2022 - a level last seen 30 years earlier - as regulated
household energy prices are due to rise sharply.
Earlier on Tuesday, the International Monetary Fund urged
the BoE not to succumb to 'inaction bias' when juggling the
trade-off between inflation pressures and ongoing risks to
growth from the COVID-19 pandemic.
(Additional reporting by William Schomberg)