Does the proposed energy plan signal the end of interest rate increases?

RG2015

Many (although not all) forecasters are saying the proposed energy cost plans will rein in inflation. This is turn could reduce the need for continued increases in the BoE base rate.

Is the likely to reduce interest rates on savings accounts, and therefore should savers move more quickly to get a current fix?

Current rates

Easy access 2.10%
1 year 3.35%
2 year 3.51%
3 year 3.56%
4 year 3.55%
5 year 3.61%

elsien

Can we wait till we’ve actually seen what is being proposed? It’s all a bit smoke and mirrors at the moment. 

RG2015

elsien said:

Can we wait till we’ve actually seen what is being proposed? It’s all a bit smoke and mirrors at the moment. 

Ha!

I wanted to get in first. 

Anyway, I doubt putting meat on the bones will change the opinions of professional and amateur economists.

I am pretty sure that the banks are already discussing their plans internally.

jimexbox

Inflation kills savers. The horrendous forecasts of the last few weeks were dreadful, so hopefully inflation will peak soon, and drop quickly.

As to base rate rises, I can't see the BoE taking their foot off the pedal yet. I can see two more rises before Christmas. 

biscan25

Crystal ball time

Truss's proposals (tax cuts) are inflationary, and speculation is that rate rises will now accelerate.
The fact that CPI will go down is just a statistical artefact. All the "stuff" that is not domestic energy will continue to increase in price unchecked.

bristolleedsfan

elsien said:

Can we wait till we’ve actually seen what is being proposed? It’s all a bit smoke and mirrors at the moment. 

https://news.sky.com/story/sterling-plunges-to-lowest-level-against-the-us-dollar-since-1985-12692126

"The pound's dire performance will also make the Bank of England more likely to hike interest rates when its monetary policy committee meets next week"

mlc2009

There was rumblings of a 0.75 percent hike next week

https://www.reuters.com/markets/europe/gradual-boe-rate-rises-have-not-tempered-price-expectations-mann-2022-09-05/

Reaper

Remember it was Rishi Sunak who wanted to reign in inflation, Liz Truss didn't as she is planning to go on as spending spree/tax cutting which will inevitably increase inflation. So let's see what she does first before saying the high rates are over.

t1redmonkey

I think it might push the BOE to only increase rates by 0.25% or 0.5% at next week's meeting (even though we know the rates are a long way behind where they should be...).  They will probably come out afterwards and say they are taking a 'wait and see' approach because of the price cap freeze.

Nebulous2

An untried top team - promising tax cuts and £100bn+ of energy support (twice what furlough cost)

What could possibly go wrong? 

The US is holding true to its commitment to raise rates to damp down inflation and we cannot afford to let the pound sink too far, so there is a tightrope to be walked. If Liz Truss carries out her promises we will be looking at higher rates, not lower ones....

sevenhills

biscan25 said:

Truss's proposals (tax cuts) are inflationary, and speculation is that rate rises will now accelerate.

The corporation tax plan is not a cut, it's a planned increase that will not take place.
Is the NI increase already in place, so I guess that is a tax cut.