Nationwide Bonds

Zak7860

Up until recently since the last Boe interest hike nationwide where offering a 1 year 4% bond.
Why have they reduced it to 3.75% a day before the next Boe interest rate announcement.
What are they predicting or is it so they can increase it to 4% again when it should be increasing to over 4% ?
Anybody have any input ?
Thanks 

phillw

No, it won't increase again after boe change. Fixes are based on long term rate and they are predicted to fall in six months

Johnjdc

Zak7860 said:

Up until recently since the last Boe interest hike nationwide where offering a 1 year 4% bond.
Why have they reduced it to 3.75% a day before the next Boe interest rate announcement.
What are they predicting or is it so they can increase it to 4% again when it should be increasing to over 4% ?
Anybody have any input ?
Thanks 

A one year fixed rate is based on how high they expect rates to be over one year, not based on what the Bank of England happens to do from one day to the next.

Think of it like a mountain. The average height of the next mile starts falling before you reach the top. It is highest half a mile from the top.

The banks think we are less than half a mile from the top, in interest rate terms.

Albermarle

Why have they reduced it to 3.75% a day before the next Boe interest rate announcement.
What are they predicting or is it so they can increase it to 4% again when it should be increasing to over 4% ?

The recent gloomy news about the UK economy and predictions that inflation may fall faster than expected in 2023, means the expectation on future B of E rate rises has probably dampened a bit.

As said above and in numerous other posts asking very similar questions, the long term rates are not directly linked to todays Bof E rates.
It is widely accepted that long term rates peaked around November 2022.

Zak7860

Thankyou everyone for taking the time to answer my query and explaining it in a way I could understand.