Base Rates Coming Down, Time to Invest in Fixed Rate Bonds?

buffman

After today's poor GDP figures, the chances of a reduction in base rates later this year has drastically increased. As most of the best buy easy access accounts have a rate that is linked somehow to base rates, investing now in a fixed rate bond looks a good bet.

I would suggest either one or preferably 2 years duration (I am an inflation bear and would not suggest anything longer).

Curently AA is offering 3.8% AER for 2 years and the Islamic Bank of Britain has a 2 year Sharia'a Compliant Fixed Term Deposit rate of 4% AER.

I am interested in your thoughts and whether anyone has first hand experience with the Islamic Bank of Britain.

Jegersmart

I guess it depends on your risk appetite (which doesn't sound very big). It also depends on the time frames and aims for the money in question.

In short, if you are set on a CD scenario then anywhere with a guarantee for your funds with whatever you can find interst-rate wise is probably good right?

Good luck

J

nilrem_2

I am not too sure that a reduction to 0.25% will make that much of a difference to fixed rate savings, the rates for which have been more allied to the libor rate rather than BOE rate for quite some time.

badger09

nilrem wrote: »

I am not too sure that a reduction to 0.25% will make that much of a difference to fixed rate savings, the rates for which have been more allied to the libor rate rather than BOE rate for quite some time.

And we know we can trust LIBOR, can't we :eek:

nilrem_2

badger09 wrote: »

And we know we can trust LIBOR, can't we :eek:

Well whether we trust it or not or whether we like it or not; interest rates on fixed rate savings are ATM allied to the inter bank lending rate.

For many years before the financial problems occurred the rate paid was entwined very closely with the BOE rate but not any more.