When will interest rates start to rise again.....

ed123_2

:rotfl: :T :A .....I assume rates will hit a low May/June next year but looking at the BOE inflation projections ( 2011- still at 1-1.5%) it does'nt look like rates will rise for at least 3 years...any views....ed:money: :beer: :j :rotfl: :T :beer: :j

1echidna

If the recession is like the one which occurred in Japan it could be many years indeed.

chalky_75

Soon I hope

gozomark

12-18 months time I'd guess - by then inflation projections 2 years hence likely to be above 2% target. Remember BOE inflation expectations are based not on unchanged interest rates, but on market expectations of interest rates - the latest BOE report uses base rate bottoming out Q409 at 2.75%, rising to 4% end 2010. Personally, I'd expect them to go lower, to around 1%, but rise quickly once economy starts to recover

http://www.bankofengland.co.uk/publications/inflationreport/ir08nov5.pdf

page 4

StevieJ

gozomark wrote: »

18 months time I'd guess - by then inflation projections 2 years hence likely to be above 2% target

Yes about 5 times above as the throw everything at it easing actually bites.

cashbackproblems

You got to remember the bank has abandoned the main aim of controlling inflation with lower/higher interest rates, as when the rate dropped to 2% inflation was falling below 4% and forecasts were that oil and food prices would drop (big inflation upon rpi) and they have as we are seeing now, rates dropped to help businesses gain cheaper credit, however this doesnt seem to be happening. I think it'll be alot longer than 18months before they start to rise again, as even if inflation rises, im an recession rates will stay low and naturally inflation will drop as demand does.

At the mo i am getting 7.2% on my fixed ICICI account until next NOVEMBER!! and the normal acc is still paying 4.75% on there!

gozomark

cashbackproblems wrote: »

You got to remember the bank has abandoned the main aim of controlling inflation with lower/higher interest rates, as when the rate dropped to 2% inflation was falling below 4% and forecasts were that oil and food prices would drop (big inflation upon rpi)

they haven't abandoned it at all - they are cutting rates as CPI is expected to drop below target

ManAtHome

Yes, but they've been wrong since 2004 (CPI above target on their 2 year horizon for 2006-2008), so whether they'll be any better going forward remains to be seen.

nilrem_2

My gut feeling is that rates will be low for at least another 2 years maybe even 3, but OTOH my crystal ball is not working too well recently, up until about 3 months ago rates were rising! I did not expect rates to fall this quickly nor by as much as they have.

chalky_75

Heaven help the savers amongst us then

[Deleted User]

12 months. Recovery is on the way, stock market has bottomed and green shoots are showing