The British public's expectations for inflation over the next year remained broadly stable at 2.7% in July, compared to 2.6% in the previous month, according to a

monthly Citi/YouGov survey released on Thursday. Expectations for inflation five to ten years ahead were slightly higher at 3.1%, up from 3% in June.

Earlier on Thursday, the Bank of England lowered interest rates from a 16-year high after a closely contested vote among policymakers who were divided on whether inflation pressures had sufficiently eased.

Inflation returned to the BoE's 2% target in May and remained there in June, a significant drop from the 41-year high of 11.1% recorded in October 2022.

"With inflation now back at target, the recent pattern in inflation expectations data suggests a close correlation between realized and expected inflation remains intact," said Citi economist Benjamin Nabarro. "For the BoE, this should provide further encouragement that second-round effects are continuing to fade in a relatively symmetric fashion, consistent with decreasing wage and domestic price pressures in the forward-looking data."