Public Confidence in BOE at Record Low as Inflation Woes Persist

Public confidence in the Bank of England is at an all-time low as officials struggle to get a grip on inflation, a survey found.

(Bloomberg) — Public confidence in the Bank of England is at an all-time low as officials struggle to get a grip on inflation, a survey found.

Only 21% of people declared themselves satisfied with the performance of the central bank when it comes to controlling prices, the lowest figure in records going back to 1999. Meanwhile, 34% said they were dissatisfied, close to an all-time high.

The findings in an Ipsos poll carried out for the BOE last month pile further pressure on Governor Andrew Bailey and his colleagues as they confront an inflation rate that is over four times the 2% target — even after the most aggressive series of interest-rate increases since the late 1980s.

They will also be taken as an implicit criticism of Prime Minister Rishi Sunak’s government, which is lagging the Labour opposition by double digits in opinion polls ahead of a general election due by January 2025 at the latest. With the BOE expected to keep raising rates through the summer, ministers are facing calls to do more to help people struggling with soaring mortgage payments.

While inflation is coming down as energy costs subside, it is doing so more slowly than the BOE predicted. Figures next week are forecast to show it remained well above 8% in May. Traders are pricing in the possibility that interest rates hit 6%, the highest in more than two decades.

Consumers still expect inflation to be running above target in five years, Friday’s Inflation Attitudes Survey found. Officials fear that elevated inflation will become embedded if workers build high expectations into wage demands.

The BOE established its quarterly survey shortly after gaining the power to set interest rates in 1997 under Governor Eddie George. Since then, its approval rating has weathered successive challenges, ranging from the first run on a bank since the 19th century in 2007, to the subsequent reduction of rates to record lows that curbed returns for savers.

Bailey earlier this week agreed to an external review of the BOE’s forecasting process after failing to anticipate the scale of the current inflation shock.

He has rejected accusations that officials were too relaxed about price pressures when the country was emerging from coronavirus lockdowns, saying much of the inflation surge was caused by external factors partly linked to the war in Ukraine. However, inflation in the UK is higher than in the US and the euro area.

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