guesses and to when the interest rate will rise

wymondham

I recon we'll see 2% by the end of 2011

abaxas

What is stopping the bank of England raising rates but offering discount to banks?

Base rate 5%, 4.5% discount to banks.

martinbuckley

I think there will be four 0.25% rises in 2011, possibly at 2-3 month intervals as the BoE allows the rises to drip-feed into the economy. I dont think there will be one before March as they will want to see what impact the VAT rise has first. 2012 will see further rises - possibly overall by 1.5%, leaving Base Rates at around 3% by Dec 2012.

wotsthat

No change in 2011

RenovationMan

abaxas wrote: »

What is stopping the bank of England raising rates but offering discount to banks?

Base rate 5%, 4.5% discount to banks.

If the BoE is lending at 4.5% to the banks, who will the BoE be lending the 5% rate to?

abaxas

RenovationMan wrote: »

If the BoE is lending at 4.5% to the banks, who will the BoE be lending the 5% rate to?

Didnt they do something about that before?

Ie the rate they lend wasnt the rate, it was the base rate + 0.5%?

Then when the SHTF they dropped this.

Ie the base rate is a number, the actual lending/deposit rate can be different.

LilacPixie

by end of 2011 I think we will be at 1%. Increases of .25% around July time and a further .25% early December.

shortchanged_2

Well the VAT rise is going to put further pressure on inflation so I think we'll see interest rates up to about 1% by the summer of 2011.

To be honest the BoE is in a bit of a catch 22 because inflation is higher than expected already, plus the growth forecast has been predicted lower than previous estimates.

Problem is with a squeeze on personal finances and a rise in interest rates there is going to be more people struggling to repay mortgage debt.

Therefore I don't see too sudden a rise in the base rate next year as it is going to be a tough year financially for many. By the end of 2012 I predict the base rate to be around 2.75%

whatyadoinsucka

does inflation matter at this present time, costs are going up everywhere it is not just the UK.

The high rate of unemployment, plus the impending public sector job losses should see to a far slower response to interest rate rises.

Andrew Sentance needs to !!!!!! imho
he's like a one trick pony, i get bored off reading his comments, IR will be 5% (when andrew give me a date)
You so far have failed to convince your BOE buddies so why will 2011 be any different.
http://www.bankofengland.co.uk/monetarypolicy/overview.htm
8 members have said retain 0.5% for how long, and 1 member (AS) has voted to rise 0.25%
its gonna take a majority to rise rates, I'll start to worry when mervyn or one of the deputies starts this talk

sorry rant over

and anyway why would hsbc offer me 4.3% (LTV70%) on a 5 year fix, if they felt rates where gonna sky rocket, when the best floating I can get is around the 2.5% mark

shortchanged_2

whatyadoinsucka wrote: »

does inflation matter at this present time, costs are going up everywhere it is not just the UK.

I suppose it depends on how high it gets and for how long they let it stay above target.

The problem is that inflation at the moment is generally caused by external factors such as high petrol, energy and food prices. These aren't necessarily under governmental control.

Problem is with high inflation is that it means less disposible income for most and if it is not matched by pay rises then people will have to cut their spending, which in turn is not good for the economy.