Interest rate predictions

Porcupine

So, the UK is grinding out of recession.

Quantitative easing seems to have avoided the spectre of deflation, but looks likely to lead to short term inflation but may settle down later.

Bank base rate is at an all-time low. But savings and mortgage rates are running at 6-10x base.

So anyone have any predictions for what savings rates might do?


Traditionally, base rates would rise to beat off inflation. Rising base rates might destabilise the already fragile mortgage market. Or maybe they won't since base rate is an irrelevance to cirrent savings and mortgage deals at the moment.

So will rates stay low, or will they rise to keep down inflation? And will that have any effect on a savings market fairly detached from the Bank rate?

Answers on a postcard...

ses6jwg

I think opinion seems to support low rates (under 3%) until 2012-2014

But nobody really knows.

Personally I wont be tying money up for more than a year.

lemon26

Would continued low interest rates help bring the banks out of their current position as surely low interest rates = low(ish) mortgage rates = less mortgage default? Or am I being overly simplistic? Apart from inflation, savings and mortgages, what do interest rates affect?