People are losing faith in the Bank of England’s rate-setting committee as it continues to raise interest rates in a bid to curb inflation, a poll shows.
The number of people who are satisfied minus the number who are dissatisfied leaves us at minus 13% – worse than the February figure of minus 4%.
The Bank of England has raised interest rates on 12 consecutive occasions to 4.5%, causing disruption in the mortgage market.
Despite this the CPI inflation rate stood at 8.7% in the year to April, far higher than the 2% target.
Many expect things to get even worse – 57% expect rates to rise over the next 12 months and 20% expect them to stay the same.
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “More people are losing patience with rate setters at the Bank of England, after a year and a half of ever-increasing interest rates have failed to bring inflation under control.
“There’s an overwhelming feeling that inflation is doing serious damage. Some 69% of people said that if inflation rose it would weaken the economy. There’s also an acceptance that the Bank is likely to raise rates – more than half of people expect them to rise over the next 12 months. There’s a real hope too that inflation will start to drop back soon. On average, people expect it to be 3.5% over the coming year.”
Some 37% think that cutting rates would be best for the economy, 25% say they should stay where they are and 16% think they should go up.
Sarah Coles added: “It’s easy to see how people are frustrated, because rising rates haven’t had a swift impact on prices. We started this period with more firepower – with lockdown savings to fall back on and more borrowing capacity after months of repaying debt.
“Meanwhile, the proportion of the mortgage market on fixed rates that means that around half of mortgage holders haven’t seen their rate change since the Bank of England started the hiking cycle. As a result, demand hasn’t dropped, so prices have remained higher.
“People are more confident that inflation will start to drop away now, but there’s every chance they’ll be disappointed that rates are unlikely to follow suit in a hurry. Some 37% of people think cutting rates would be best for the economy and 31% said it would be better for them. In both cases, there was more support for cuts than rises.
“In fact, rates are unlikely to fall before 2024, and there’s every chance they’ll linger at this level for longer. It means that frustration with higher rates is unlikely to ease soon.”