Less than 20% of population satisfied by Bank of England

After yet another rise in inflation, it appears that the people have finally lost confidence in Mervyn King, the Bank of England and the Monetary Policy Committee.

A recent survey has claimed that the net balance of people satisfied with the Bank of England’s performance has fallen to under 20 per cent this year, albeit popularity for the Bank was still as low as 30 per cent in early 2010.

There are seemingly a number of reasons associated with the Bank’s fall in popularity over recent times with many of these being highlighted in the Bank of England’s quarterly report. The report claimed that ‘Households with higher inflation perceptions tend to be more likely to report that they are dissatisfied with the Bank’ with figures showing Consumer Price Index (CPI) levels rising to 4.5 per cent in the last quarter, there highest in over two and a half years and a high increase from 3.1 per cent as seen in July 2010. In addition, Retail Price Index figures (which include mortgage interest repayments) have remained high throughout the period, worryingly for the mortgage broker.

Rob Killeen, mortgage broker and business manager of City of London mortgage brokerage ‘Capital Fortune’ has shared his views on the people’s dissatisfaction of the Bank. He states; ‘It is pleasing that the Bank of England continue to remain independent. However, it is absolutely vital they do not succumb to political pressures in order to see us out of the economic downturn.’

However, as vital as it may be, it is looking increasingly unlikely that the Bank will be able to succumb to political pressures. With inflation at its highest levels in the UK since December 2008, the Consumer Price Index seems likely to hit five percent and remain above the government set target of 2% (+/-1) throughout the entirety of 2012. Furthermore, if as expected there is a rate hike from the Bank of England base rate of 0.5%, inflation levels will continue to be higher than levels set.

With the Eurozone and the European Central Bank (ECB) having announced that rates will be increased to 1.5 per cent, it is vital that the Bank of England continue to remain competitive within the wider European and Global economy. It is no surprise that confidence outside of the Bank is low. However, if long term inflationary expectations ‘remain anchored’ as according to the Bank of England’s report, economic growth and a fall in inflationary levels may yet still be seen.