Britons Growing to Expect Interest Rate Hike, Poll Shows

By Paul Hannon 

        LONDON--The proportion of Britons expecting interest rates to rise in the coming year is increasing, but slowly, according to a Bank of England survey published Friday. The BOE said 42% of Britons polled in May expect the central bank's benchmark interest rate to rise from 0.5% in the next 12 months, up from 40% in February and 37% in November. The survey found the proportion of Britons expecting rates to stay the same over the next 12 months fell only slightly, to 36% from 37% in February.
        With the economy growing strongly and unemployment falling, most economists and investors expect the BOE to raise its interest rate for the first time since the onset of the financial crisis early next year.
        BOE officials have done little to question those expectations, but have said their benchmark interest rate will rise only gradually, and will remain low by precrisis standards.
        Some economists fear that when it comes, a hike in the BOE benchmark rate may come as a shock to homeowners and other borrowers, some of whom have never experienced a rate hike.
        The BOE's surveys suggest consumers aren't as prepared as investors for rising interest rates. In addition to the 36% who expect rates to be unchanged, 3% expected the interest rate to fall, and 18% said they had no idea how interest rates were going to behave.
        Pollsters GfK NOP interviewed 1,986 Britons between May 8 and 13 to compile the survey.
        The poll found Britons' expectations of future inflation declined in May. Respondents said they expect annual inflation of 2.6% over the next year, the lowest figure since February 2010, and 2.9% in five years' time, the lowest since August 2009. The BOE's target is 2%.
        Write to Paul Hannon at paul.hannon@wsj.com
        (END) Dow Jones Newswires

        June 06, 2014 05:04 ET (09:04 GMT)