S&P Global UK Household Interest Rate Expectations Index12 Sep 2022 14:11
UK households report most hawkish interest rate expectations on record, according to latest survey data
Key findings:
Record net balance (+61%) of UK households expect imminent rate hike
Two thirds (66%) of UK households expect the base rate to rise by end of 2022...
... with proportion rising to four-in-five (80%) over six- month horizon
Data were collected 1-5 September
UK households expect the Bank of England (BoE) to continue on its hawkish policy course, according to the latest representative survey of 1,500 UK households compiled by S&P Global, with expectations of a further, imminent rate hike hitting a survey record level in September.
Overall, 66% of households surveyed in September expect the UK’s central bank to raise the base rate of interest within the next three months, up from 61% in August, and the highest reading since data collection began nine years ago.
At the same time, only 5% of households are expecting the next move by the BoE to be a rate cut, the lowest proportion since March 2022.
At +61% in September, the resulting net balance rose sharply from +55% in August, surpassing May’s peak of +59% to signal the most hawkish expectations towards interest rates amongst UK households on record.
This signals continued expectations amongst UK households that the central bank will maintain it’s hawkish policy stance and increase the base rate further to curb inflation, despite recent warning signs from business survey data that the economy has slipped into contraction, with weakening demand fundamentals exacerbated by the cost of living crisis.
Looking into 2023, 80% of UK households surveyed in September anticipate an increase in the base rate within the next 6 months, rising to 90% over the 12-month horizon, with both readings the highest on record.
https://www.pmi.spglobal.com/Public/Home/PressRelease/9f168e56befd43bab43810d577bab2d0