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Not the time?

edited 30 November -1 at 1:00AM in Savings & Investments
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Gastines2Gastines2 Forumite
116 posts
edited 30 November -1 at 1:00AM in Savings & Investments
With our new bod in charge at the B.o.E. saying that he is expecting interest rates to rise to 2% in the not too distant future,I am delaying placing our pot in a fixed rate saver.Wise or not?
I seem to remember many of the experts predicting an interest rate of 8% about 5-6 years ago, they went very quiet when it went 2----1
1/2%!!!

Replies

  • jimjamesjimjames Forumite
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    Has he really said that? Do you have a link?

    I though the latest was that 0.75% might be a year closer than it was before but no mention of higher rates which seems very unlikely.

    Indeed some mention recently was about negative rates
    Remember the saying: if it looks too good to be true it almost certainly is.
  • redbuzzardredbuzzard Forumite
    698 posts
    You can wait a long time for predictions to come true these days.

    I booked 2 years at 2.55% on a cash isa recently without any qualms. If the rates increase I have some more cash to find a home for and it will be nice problem to have.
    "Things are never so bad they can't be made worse" - Humphrey Bogart
  • innovateinnovate
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    jimjames wrote: »
    Has he really said that?

    I very much doubt he did. It would be professional suicide on an international scale to make such a statement in the present climate.
  • jimjamesjimjames Forumite
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    innovate wrote: »
    I very much doubt he did. It would be professional suicide on an international scale to make such a statement in the present climate.

    Absolutely. Hence my question asking for a link to the statement.

    If anything Carney seems more likely to want rates lower than King did.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • ReaperReaper Forumite
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    As above I think the OP is mistaken. Carney is believed to be in favour of even more stimulus which is the exact opposite of raising interest rates.
  • 20102010 Forumite
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    Here`s what Merv said, you know the man who couldn`t keep inflation at 2%, printed billions of £££££££££££`s (and gave it to the bankers) and who was in charge when the big crash happened.

    Interest rates cannot go up now because so many young homeowners face mortgage timebomb, Bank of England warns

    The eye-watering mortgage debts of homeowners in their 30s and 40s means that the Bank of England cannot raise interest rates without pushing millions of people into an 'unsustainable' position, Sir Mervyn King has warned.
    (lose their homes)

    http://www.thisismoney.co.uk/money/mortgageshome/article-2348788/Bank-England-Homeowners-30s-40s-owe-mortgage-rates-rise.html

    Sounds like the economy is being run for people who have bitten off more than they can chew with massive mortgages. (debtors).

    I expect Merv thinks he`s done a great job, certainly leaving with a great pension and pay off.
    Yet again in this "great" country
    is rewarding FAILURE.
  • redbuzzardredbuzzard Forumite
    698 posts
    We need to be careful what we wish for.

    Savings rates of 4% are no good if inflation is 8%. The inflation usually comes before the rate rise too.
    "Things are never so bad they can't be made worse" - Humphrey Bogart
  • bowlhead99bowlhead99 Forumite
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    redbuzzard wrote: »
    We need to be careful what we wish for.

    Savings rates of 4% are no good if inflation is 8%. The inflation usually comes before the rate rise too.
    Exactly. A rise in interest rates can keep the economy in check and not inflating out of control, by encouraging people to save money that would otherwise have been spent, and by dampening the growth in asset prices that would have come from everyone getting free and easy credit.

    If they raise rates it is typically to put the brakes on a high inflation economy and not because of a philosophical view that people should be able to get lots of free money on their current account or ISA just because they happen to have a lot of money that they don't want to spend.

    If you are lucky enough to have a substantial pot of savings and think the likely direction of interest rates is upwards, then according to this site you can get 1.7, 1.75% with Yorkshire or ICICI with unlimited withdrawals, which is only a quarter of a percent or so lower than the best 1-year fixes. If you don't need the money and don't think rates are on the up, take the fix.

    The UK and US may slow down the money printing in the next year or so, but actually increasing the interest rates is quite a bit of a step further than that. The media surrounding government, Carney and BOE a few months ago were that perhaps we should be looking at other measures such as employment and growth rather than just trying to keep inflation down, and by implication there is no perceived need to rush back into having high rates which throttle the economy back.

    Of course there has been some better economic data in recent months so maybe they will not be so vociferous in keeping rates down and money printing unchecked - but the funding for lending scheme was extended, so the banks can get their cash from there, meaning no major pointers to higher high-street savings rates over the next year or so.
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