LONDON (Reuters) - The number of Britons expecting the Bank of England to raise interest rates in the next two years has risen sharply since it first presented its forward guidance policy in August, a poll conducted for data company Markit showed on Thursday.
Some 69 percent of Britons expect rates to rise within two years, up from 55 percent in August, while 44 percent expect a first interest rate rise within the next year, up from a previous 33 percent, the survey showed. Both readings are below their levels in July.
BoE Governor Mark Carney said in August that the central bank would not raise interest rates before unemployment falls to 7 percent - something he forecast would take three years - unless inflation threatened to get out of control.
While this initially caused the public to push back their expectations of a first rate rise, financial markets have been sceptical that unemployment will fall as slowly as the central bank predicts.
"Households appear to have responded to the brightening economic picture by bringing forward their expectations of when the bank will need to start hiking rates," said Markit economist Chris Williamson said.
"Given current trends, the prospect of higher rates seems to have had little impact on the demand for home loans and spending. However, the worry is that higher borrowing costs will hit the recovery hard if interest rates start to rise before incomes show a sustainable upturn in real terms," he added.
The poll of 1,500 households was conducted between October 11 and October 14 by polling company Ipsos-MORI.
(Reporting by David Milliken; editing by Stephen Nisbet)
- Budget, Tax & Economy
- interest rates