S&P Global UK Household Interest Rate Expectations Index15 Jun 2022 06:33
UK households expect further rate hike, according to latest survey data
Key findings:
A near-record 56% of UK households expect central bank to hike rates in next 3 months...
... with three-quarters of households anticipating a hike by the end of the year
Fewer than one in ten (6%) believe the next move by the central bank will be a cut
UK households maintained hawkish expectations towards interest rates in June, and continue to expect an imminent rise in the Bank of England base rate, according to the latest representative survey of 1,500 UK households compiled by S&P Global.
At 56% in June, the proportion of UK households expecting a rate hike within the next 3 months was the second-highest on record, lower only than May’s reading of 65%.
Conversely, just 6% of those surveyed expect the next move by the central bank to be a rate cut, amongst the lowest on record.
The resulting net balance in June, at 50%, was the fourth- highest recorded since data collection began in July 2013, and signalled a sustained expectation that the UK’s central bank will raise the base rate of interest to temper inflation, despite ongoing uncertainty towards the macroeconomic outlook and deteriorating household finances amid the cost of living crisis.
That said, the latest net balance was down from 59% in May, suggesting that expectations of an imminent interest
rate hike have cooled, if only slightly.
The proportion of UK households anticipating higher interest rates within the next six months also edged down from May’s figure of 79%. Nonetheless, a quarter of households expect the Bank of England to hike rates again by the end of 2022, with that figure rising to around nine in ten for the 12-month (85%) and 24-month (89%) time horizons.
The data suggest little-tempering of expectations at UK households of higher interest rates in the short term, ahead of the next Monetary Policy Committee decision at midday on Thursday 16th June
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