BoE survey: UK inflation expectations eased in August

The survey also showed a softer interest-rate outlook. Some 51% of respondents still expected rates to rise over the next year, but that was down from 53% in May, while 27% expected no change, up from 23%. Just 11% saw rates falling, though that still suggests a consumer base that believes borrowing costs are near a peak.

For the BoE, the details support the case that inflation psychology is cooling even if price pressures have not fully vanished. That matters for household spending, mortgage demand and corporate pricing power, all of which feed into the central bank’s decisions on how long to hold rates restrictive.

Markets showed the same broad message in rates trading. The UK bond proxy IEF was weaker in the latest session, while GBP/USD hovered around 1.35, with technical indicators such as the 50-day moving average and RSI readings pointing to a cautious, range-bound backdrop rather than a decisive re-pricing. Investors remain focused on whether the BoE can stay on hold for long enough to bring inflation expectations lower without triggering a sharper slowdown.

The BoE said comparisons with May should be treated carefully because Savanta replaced Ipsos as survey provider in August. It also noted that a parallel May survey under Savanta already showed lower expectations, meaning part of the drop likely reflects a methodology change rather than a pure shift in sentiment.

Still, the direction of travel is important. If expectations keep easing, it improves the odds of a steadier path to rate cuts later on and reduces the risk that consumers and businesses keep building higher inflation into pay deals and prices.