A growing number of UK households are expecting interest rates to rise sooner rather than later

20th August 2015


A growing number of UK households are anticipating that interest rates will rise within the coming 12 months.

According to the latest Markit Household Finance Index, more than three-quarters of people, at 78%, now anticipate that the Bank of England will hike rates in the next year, up from 62% in July.

However the study also found that many people expect monetary policy will tighten sooner, with 48% forecasting a rise within the coming six months.

The survey’s August data indicated that the squeeze on UK household finances worsened for the second time in the past three months, which brought the headline index down further from its post-crisis peak. This was highlighted by a fall in the index to 43.4 in August, from 45.1 in July.

The latest reading was the lowest so far in 2015, but still above the average, of 39.4 since the survey began around six and a half years ago.

At the start of August, the Bank of England’s Monetary Policy Committee, which is responsible for setting interest rates, voted eight to one, to keep the cost of borrowing at its historic low of 0.5% for another month.

Bank of England governor Mark Carney has already cautioned that when rates eventually start to rise, they will do so at a gradual pace. Presently the consensus is the base will rise sometime in early 2016.


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