Rate predictions 2022, 2023

TonyTeacake

I don't think most of us can predict exactly, but I'm sure some people will get close. I will say between 7 and 10 % by the end of 2023. 

One thing I am certain of is the day of ultra-low interest rates is over. This inflation monster has been created by loose monetary policy and all the covid money handouts, and from March we started to see petrol prices go up fast. Now we have a war which has pushed food prices higher along with the cost of fuel. Let's also not forgot we also have supply chain problems.

When you add all these things together this inflation monster will be with us for many years. BOE have got all their predictions wrong about inflation and this will only get worse. Come winter time many people will struggle and we will start seeing mass layoffs all over as we head into a big deep recession. The days of cheap borrowing are over.
We will be seeing the stock markets and housing markets collapse in front of our eyes like we have never seen before. 

It will be carnage.

ChilliBob

Quire a varied response, but a fair few of you reckon we could be in for double of more than that for the end of 2022. The 2023 side of things seems to create quite a divide between those who think it'll receded back to say 1 vs those who think it'll increase.

Interestingly the average from 76-2022 is around 7%! My guess would have been closer to 2-3%!

Wonder if/when we'd return to the double digits interest we saw before. I remember having a couple of those Icelandic bank accounts like thay in the 2000s era, not sure when sometime between 04 and 08 is my best guess. I think I had the Kapthunk edge thingy not the Icesave one or something 

kuratowski

For what's worth:
2022: 2.25%
2023: 2.75%

It's obviously harder to predict further out, a lot more time for unexpected events happen, which could cause rates to move quite
sharply.  Inflation is currently being driven by external shocks and disruption to the supply chain.  (Nothing to do with loose policy.)  The danger would be that inflation becomes self-reinforcing due to peoples' expectations shifting based on the current situation.

Assuming we don't get any more major surprises, my central prediction would be for 3-4 more hikes this year, to try and discourage inflation expectations from becoming entrenched.  By the middle of 2023, given everything going on, I would expect the economy to be looking very flat, so just 1-2 more hikes that year.  It's pure guesswork.

What_time_is_it

And don't forget that inflation is only caused by poor people having more money. Rich people having more money is absolutely fine. And pensioners too. They're also fine. But you plebs? You'll only go out and spend it won't you, It's basically your fault for spending all that money you don't have.

TonyTeacake

kuratowski said:

For what's worth:
2022: 2.25%
2023: 2.75%

It's obviously harder to predict further out, a lot more time for unexpected events happen, which could cause rates to move quite
sharply.  Inflation is currently being driven by external shocks and disruption to the supply chain.  (Nothing to do with loose policy.)  The danger would be that inflation becomes self-reinforcing due to peoples' expectations shifting based on the current situation.

Assuming we don't get any more major surprises, my central prediction would be for 3-4 more hikes this year, to try and discourage inflation expectations from becoming entrenched.  By the middle of 2023, given everything going on, I would expect the economy to be looking very flat, so just 1-2 more hikes that year.  It's pure guesswork.

  You say inflation is currently being driven by external shocks and disruption to the supply chain.  (Nothing to do with loose policy.

I agree but it was started by loose monetary policy, all of this money printing with too many people chasing goods all at once in the economy.

sevenhills

TonyTeacake 

I agree but it was started by loose monetary policy, all of this money printing with too many people chasing goods all at once in the economy.

It is government they set money supply, I agree the government stoked the economy with free money.
What the government does will determine rates. The Tories may change their leader soon, so an election in 2023/24, they will no doubt mump money into the economy again, just before the election.
Paying back our debt will take money out of the economy, will we do that?

Nebulous2

2022: 2.5%
2023: 2% 

I expect the pain of price rises, including an October rise in utility costs, to either be more effective, or upset the populace so much, that the interest rates will be less than many commentators expect.

I subscribe to a ‘pendulum effect’ theory. When things have gone out of balance they often overcorrect and then have to swing back to a central point. 

ranciduk

TonyTeacake said:

I don't think most of us can predict exactly, but I'm sure some people will get close. I will say between 7 and 10 % by the end of 2023. 

I don’t know how old you are - but interest rates won’t reach 7% in your lifetime 

10%?? not in a hundred years

sevenhills

ranciduk said:

10%?? not in a hundred years

So 15% is never going to happen 🤣🤣

We cannot predict the political scene, wars, pandemics, recessions and despot leaders, more than 12 months in advance.

2010

ranciduk said:

TonyTeacake said:

I don't think most of us can predict exactly, but I'm sure some people will get close. I will say between 7 and 10 % by the end of 2023. 

I don’t know how old you are - but interest rates won’t reach 7% in your lifetime 

10%?? not in a hundred years

Interest Rate in the United Kingdom averaged 7.17 percent from 1971 until 2022, reaching an all time high of 17 percent in November of 1979 and a record low of 0.10 percent in March of 2020.16 Jun 2022

https://tradingeconomics.com/united-kingdom/interest-rate#:~:text=Interest Rate in the United,percent in March of 2020.