Inflation expectations drop, Citi expects more QE

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LONDON (ShareCast) - Inflation expectations in the United Kingdom for the next 12 months dipped to 2.7% in December from 2.8% in November (Xetra: A0Z24E - news) , according to survey results from YouGov.

Inflation expectations for the next five to 10 years also dropped, coming in at 3.3%, a tenth of a percentage point lower than a month ago.

"Inflation expectations have actually fallen over the last year and last two years, despite continued above-target inflation and further unconventional policy stimulus," Citi economist Michael Saunders said.

"These readings for inflation expectations are unlikely to stop the Monetary Policy Committee (MPC (KOSDAQ: 050540.KQ - news) ) from expanding quantitative easing (QE) further if, as we expect, the economy continues to undershoot their expectations," he added.

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