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| UK Public's Inflation Expectations for Next Year Fall Sharply, Says BoE Survey |
The median UK public's inflation expectations for the coming year dropped significantly in February, according to a quarterly survey conducted by the Bank of England (BoE)/ Ipsos. The findings revealed that the median public inflation expectation for the next year was 3.9% in February, down from 4.8% in November. Meanwhile, the median public inflation expectation for 1-2 years was 3.0% in February, down from 3.4% in November. For 5 years, the median public inflation expectation was 3.0% in February, compared to 3.3% in November.
The sharp decline in inflation expectations reaffirms bets that the Bank of England (BoE) will pause its rate-hiking cycle next week, contributing to capping the GBP/USD pair. The pound sterling is hit by the BoE survey findings, as GBP/USD is paring back gains to trade at 1.2135. The pair is still up 0.23% on the day. The survey also shows that the market is not expecting any inflationary pressures over the next few years, which may lead to a pause in rate hikes by the BoE.
