Bank of England poll shows 49% of households expect an interest rates rise in the next 12 months

Half of all Britons expect interest rates to rise over the next 12 months, according to a Bank of England survey.

The Bank’s quarterly poll showed 49pc of people expected policymakers to begin increasing rates from a record low of 0.5pc within a year, up from 42pc in May.

This is the highest proportion since May 2011, when the economy was showing signs of recovery and three policymakers were voting to raise rates to keep a lid on inflation.

The survey showed 43pc of respondents expected rates to rise “a little” over the next 12 months, while 6pc believed they would go up sharply. Just 4pc of respondents expected rates to fall.

The poll of 2,000 people was conducted between August 7th and 15th, meaning some respondents would have seen the Bank’s latest Inflation Report, which was published on August 13 and showed the economy remained strong, despite weak wage growth.

However, the answers were collected before minutes of the Bank’s August interest rate meeting were published, which revealed that two rate setters – Martin Weale and Ian McCafferty – voted for a 0.25 percentage point increase to 0.75pc.

Mr Weale voted for a rates to rise between January and July 2011, when the economy was picking up and inflation was close to hitting 5pc. He was joined by Andrew Sentance, a former external member of the MPC and Spencer Dale, ex-chief economist.

The survey also showed inflation expectations were creeping up. Households believe prices will rise by 2.8pc over the coming year, compared with 2.6pc three months ago and the current inflation rate of 1.6pc.

For the next two years, inflation expectations, as measured by the Consumer Prices Index (CPI) rose to 2.8pc from 2.5pc in May, while inflation expectations five years from now rose to 3.4pc from 2.9pc in May.

A fifth of respondents said higher interest rates would be best for the economy, unchanged from May, while more than a third said rates should stay where they are.