Confidence in Bank of England plummets to all-time low

Public confidence in the Bank of England has crashed to a record low amid mounting questions over its handling of the economy.

Two in five Britons – some 40 per cent – think the central bank is doing a bad job of controlling inflation, according to its own survey of households by market researcher Ipsos.

Just 19 per cent are happy with its performance. That gives a net satisfaction rating of minus 21 per cent – the lowest since records began in 1999. 

Turmoil: Public confidence in the Bank of England has crashed to a record low amid mounting questions over its handling of the economy

The findings suggest that the Bank, run by governor Andrew Bailey, has lost the trust of the public as it aggressively hikes interest rates, having seen inflation spiral to a 40-year high.

The Bank is widely expected to hike rates to 5.5 per cent next week, having raised them from 0.1 per cent in December 2021 to 5.25 per cent – a 15-year high. 

But according to bets on financial markets, that will be the last rate rise of the year, with the central bank tipped to pause and assess the impact of 15 successive hikes.

Myron Jobson, at Interactive Investor, said: ‘The public’s confidence in the Bank of England’s ability to control inflation continues to wane – a finding that could increase pressure on the UK’s central bank, which has come under fire for failing to predict the scale and persistence of inflation. Market sentiment suggests that the Bank is odds on to increase interest rates to 5.5 per cent next week in a bid to further curb price increases.’

Investors are split over whether there will be further rate rises in early 2024 before they then head back down towards 5 per cent in the second half of the year.

Although inflation has fallen from a peak of 11.1 per cent in October last year, it remains high at 6.8 per cent – well above the Bank’s 2 per cent target.

Official figures next week are expected to show it ticked up again in August due to rising petrol prices. That will present the Bank with a headache amid warnings that the large increases in interest rates risk pushing the economy into recession.

Official figures this week showed the economy contracted by 0.5 per cent in July – though this was in part put down to strikes by doctors and teachers and the wet weather.

Paul Dales, chief UK economist at Capital Economics, said: ‘We think that a rise in interest rates from 5.25 per cent to 5.5 per cent on Thursday will be the last hike in this cycle and that sticky inflation will force the Bank to keep rates at their peak until late in 2024.

‘But when rates are eventually cut, we suspect they will be reduced further and faster than investors expect.’