Bank of England survey: In a recent survey conducted by the Bank of England (BoE), British public's expectations regarding inflation over the next year have shown a decline, potentially offering relief to policymakers deliberating on interest rate adjustments.

According to the survey results released on Friday, median expectations for inflation in the upcoming 12 months dropped to 3.0 per cent in February, marking their lowest level since August 2021, down from 3.3 per cent reported in November.

While expectations for the following 12 months remained steady at 2.8 per cent, longer-term projections decreased to 3.1 per cent from 3.2 per cent.

The downward trend in inflation expectations arrives amid the backdrop of consumer price inflation registering at 4.0 per cent in both January and December, doubling the BoE's targeted rate.

Although public inflation expectations are not direct predictors of future price movements, they serve as a gauge for potential pressure on wage increases and consumer acceptance of higher prices, factors closely monitored by BoE economists.

The BoE's forecasts suggest a return to the 2 per cent inflation target in the second quarter of 2022, but anticipate a subsequent increase toward 3 per cent later in the year as the effects of lower energy prices dissipate.

With annual wage growth hovering around 6 per cent, double its pre-pandemic rate, managing inflation remains a focal point for the BoE's monetary policy decisions.

In light of the survey findings, satisfaction with the BoE's inflation control measures increased, indicating a shift in public sentiment compared to previous months.

While the possibility of a rate cut remains under consideration, recent data suggests that immediate action is unlikely, given persistent wage growth and elevated services price inflation.

Analysts surveyed by Reuters expect the BoE to maintain interest rates during its upcoming March decision. However, projections indicate a 40 per cent likelihood of a rate cut by the second quarter of 2024, highlighting ongoing uncertainty in monetary policy direction amidst evolving economic conditions.

(With Reuters inputs)