A majority of UK households are expecting interest rates to climb even further in the months ahead, according to a survey by the Bank of England.
Some 58% of those surveyed anticipate interest rates to rise over the next year, with only 21% expecting rates to go down. Still, the majority that expects interest rates to climb have come down from the previous 74% recorded in December.
Most UK households also think that hiking interest rates is not good for the economy, with 33% of respondents saying that interest rates should ‘go down’. Only 16% said rates “should go up” when asked about what would be “best for the economy”.
The vast majority of individuals surveyed also expressed how they have seen cost rise at every turn. Three quarters (75%) of respondents said that interest rates on things such as mortgages, bank loans and savings had risen over the past 12 months.
The Bank of England's Monetary Policy Committee (MPC) is meeting next week to decide whether to raise interest rates for the 11th time in a row.
The central bank’s assessment of the UK economy hints at rising interest rates and prices.
"There are considerable uncertainties around this outlook, and the MPC continues to judge that the risks to inflation are skewed significantly to the upside," chief economist Huw Pill said.
However, policymaker Swati Dhingra has called for UK interest rates to be kept on hold, warning that another increase risks 'deepening the pain' for households.
Dhingra, a member of the Bank's MPC, said a "prudent strategy would hold policy steady" after raising rates for 10 consecutive meetings.
“Overtightening poses a more material risk at this point, through potential negative impacts from increased borrowing costs and reduced supply capacity going forwards,” she said at a Resolution Foundation event.
“It risks unnecessarily denting output at a time when the economy is weak and deepening the pain for households when budgets are already squeezed through energy and housing costs,” she added.
Dhingra opposed last month’s increase in interest rates from 3.5% to 4% and is seen as a dove in the Bank’s MPC, alongside Silvana Tenreyro.
The Bank of England raised the UK interest rates by 0.5% to 4% in February, the highest since the financial crisis of 2008.
When it comes to inflation, expectations over the coming year time dropped to 3.9% from 4.8% in November while those for inflation in the following 12 months – which are closely watched by the BoE – fell to 3.0% from 3.4%.
Expectations for inflation in five years' time fell to 3.0% from 3.3% in November.
Watch: Are Central Banks Fighting the Wrong Fight?