Forecast of lower inflation

talexuser

Ernst and Young forecast (using same model as Treasury if that is a recommendation! ) says growth zero this year, minus in 1st half balanced by tiny growth in 2nd half.

Inflation is predicted for 1.7% by end of year.

What do you think this means for saving rates? - lower still?

grey_gym_sock

it doesn't really directly affect savings rates.

if inflation is low and growth non-existent, bank base rate is unlikely to rise, so savings rates are likely to remain at least roughly where they are now.

talexuser

I realise that there is no direct link but would be very surprised if we can still get instant access 3%+ gross rates at year end if inflation has gone to below 2%.

GeorgeHowell

Savings rates are largely dependent on the banks' need to raise funds. If they are not lending much they don't need to borrow much.

Masomnia

Yeah, buddy!

Lower inflation expectations will put downward pressure on yields on various bonds, gilts, high rated corporate debt, and other such securities. So I should imagine that means downward pressure on savings too. Oh well.

redmalc

It effects my National savings,it his RPI linked

sabretoothtigger

Lower growth in a country that imports doesnt mean prices have to drop. Not long term, its more likely we revolve around world gdp.

Depends how spongy the prices are, if people have less money and so less demand then the price drops in line but only so much, as demand exists elsewhere in the world.
I think petrol shows this best, its not going down because wages didnt rise this year

RobStaffs

Took out some fixed term ISA's and savers last year.Fixed for about 2-3 years , on average 4% return.So I think this was a decent move.Also have two fully invested NSI ILC's taken out last year so these will be at least up with inflation, although probably ultra cautios in terms of making my money work for me

Will now probably max my allowance re me S&S ISA's as I cant see too much else to go at.