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Poll: Where do you expect Interest Rates to be in 2 years time?
Options
phlash
Posts: 883 Forumite
Blind hope if ever I've heard it.
Inflationary pressures around mean that I very much doubt you'll see 5%. That also seems to be the sentiment of the poll.
Inflationary pressures around mean that I very much doubt you'll see 5%. That also seems to be the sentiment of the poll.
I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.
That also means I cannot share in any profits from any decisions made!;)
That also means I cannot share in any profits from any decisions made!;)
What will Interest Rates be in 2 years time? 176 votes
4.0% or less
6%
11 votes
4.25-4.75%
3%
7 votes
5.0-5.5%
10%
18 votes
5.5% (Current Interest Rates)
6%
12 votes
5.75-6.25%
25%
44 votes
6.5-7.0%
31%
56 votes
7.25% or higher
15%
28 votes
0
Comments
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5.75-6.25%Methinks that 7% is possible, however that would be the new 15%.0
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6.5-7.0%I notice Evan Davis mentioning IR's going up to six point something, in the near future! I know he's the BBC economics correspondent, but the blokes no fool. I'd believe him over many 'so called' Economists.
http://news.bbc.co.uk/newswatch/ukfs/hi/newsid_3900000/newsid_3907200/3907249.stm0 -
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6.5-7.0%Inflation moves in long cycles, it won't have been "fixed" by two years time.
We're looking at long-term IRs at 6-6.5%.poppy100 -
7.25% or higherGorgeous_George wrote: »If IRs continue to rise, deflation will be the problem.
not even close to that yet. Inflation, per the Governor, was to be back to 2% by now. It's way over target still, no sign of deflation. Did we get deflation when interest rates were double digits in the past???0 -
6.5-7.0%Inflation moves in long cycles, it won't have been "fixed" by two years time.
We're looking at long-term IRs at 6-6.5%.
2nd that.
Wolvoman - 2 years in the financial sense is a very short period of time. You really think that the binge on credit of the last decade or so will be 'sorted' in two years? If you do, you've got a mighty shock coming.I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.
That also means I cannot share in any profits from any decisions made!;)0 -
6.5-7.0%Bump....want a bigger population for this poll!I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.
That also means I cannot share in any profits from any decisions made!;)0 -
6.5-7.0%A lot of this depends on the Bank of Japan. They have a stated policy of 'interest rate normalisation'. To translate that into English they mean increasing their base rates from 0.5% as now to about 2.5%.
The main thing keeping the CPI low is the low price of imported goods. There are 2 main things contributing to that - low wages in China and the high value of the pound. The pound is being kept high in part by people borrowing money in Japan at 0.5% and lending it in the UK at a minimum of the base rate, often more. This is known as the 'carry trade'. Also 'hot money' is being attracted by comparatively high interest rates in the UK.
If Japanese interest rates increase, the carry trade will become less profitable. That means the demand for pounds will fall. If demand for pounds falls, the price of pounds will fall. That will make imports more expensive and the Bank of England will be forced either:- To raise rates to make the carry trade profitable again (risking an unwinding of the property boom and, worst case, deflation like during the 'lost decade' in Japan that followed their property boom)
- To accept a falling pound and the inflation that will accompany it. If that happens I suspect we'll end up with stagflation (rising prices and unemployment).
that reflects increases in productivity rather than inflationary pressure.
I voted 6.5-7.0% but it really depends on Japanese inflation. The figure for CPI last month was -0.1% so no inflationary pressure so far. Two years is a very long time in monetary policy though. Rates could easily move up or down by 2% over that period.0 -
5.0-5.5%Two years is a very long time in monetary policy though. Rates could easily move up or down by 2% over that period.2 years in the financial sense is a very short period of time.
If you look at historical movements of interest rates, they can easily fluctuate by several percentage points in just a year or two, even since the independant BoE.
The BoE will want to remove inflation from the economy (and I accept it might be stubborn), but they won't want to put the UK into a near or actual state of recession to do it.
Hence I see them rising to 6%, maybe a tad more and then staying there for 6 months to a year. Then the effect on retails sales, business investment etc might start to bite too much and they'll lower rates back down to under 6% and I think then down to nearer 5%.
House prices will be unimportant to the decisions.0 -
6.5-7.0%House prices will be unimportant to the decisions.
I disagree, I think house prices will be very important to the decision. The BoE must be terrified that if they raise rates too far we'll end up with a nasty credit crunch that will threaten the real economy.
If the banks need cash they can't call in mortgages but they can call in all that short term financing (usually overdrafts) used by smaller companies.0
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