UK inflation expectations ebb before BoE meeting, Citi/YouGov survey shows

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LONDON (Reuters) -The British public’s expectations for inflation for the next 12 months and further ahead have cooled markedly ahead of the Bank of England’s interest rate meeting next month, a survey showed on Wednesday.

Inflation expectations for the year ahead fell to 2.6% in June, their lowest level since March 2020 and down from 3.1% in May, the survey from banking group Citi and pollsters YouGov showed.

Expectations for inflation five to 10 years ahead fell to 3% from 3.2%, the lowest reading since May 2020.

“For the (BoE), this should provide further encouragement that second round effects are continuing to fade in a relatively symmetric fashion, consistent with fading wage pressures in the forward-looking data,” said Citi economist Benjamin Nabarro.

Investors see a roughly 33% chance of a BoE interest rate cut on Aug. 1 after inflation data showed strong underlying price pressures in Britain’s economy, despite the headline rate of price growth holding at 2%.

Earlier this week the chance of a rate cut was around 50%.

(Reporting by William James, writing by Sachin Ravikumar and Andy Bruce, Editing by Kylie MacLellan)