LONDON (Reuters – British people’s inflation expectations have jumped to their highest point since 2008, according to bank Citi. This is something the Bank of England should note when it considers raising interest rates next Wednesday.

Based on Citi’s monthly survey conducted by pollsters YouGov on Oct. 21-22, the Citi forecast that inflation will rise to 4.4% over 12 months, up from 4.1% in September.

From 3.8% in September, however, expectations of inflation over the next 5-10 years dropped to 3.7%.

As the coronavirus shut down the global economy, inflation is rising in many countries.

Huw Pill (BoE chief economist) stated last week that he believes consumer price inflation could rise to 5% in Britain, which is more than twice the BoE target of 2% before it falls back.

Citi Economists stated that when the BoE assessed inflation expectation risks, it considered many indicators and Tuesday’s survey results were unlikely to cause an increase in pressure for a rate rise.

However, they stated that “it is not likely to trigger any major dovish assessment either – especially since financial market measures are continuing to increase.”

The BoE is expected to raise the Bank Rate on November 4, which would bring it up to 0.2% from its historic low of 0.1%. Investors have already priced in this rate increase. According to Reuters, most economists believe that the BoE won’t move until 2022. [ECILT/GB]