Interest Rate Predictions Tristan on 04 Mar 2009 09:22 am
Interest Rate Predictions For Thursday 5th March 2009
The base rate announcement will be tomorrow lunchtime, at midday, but what will it hold for mortgage holders and savers alike? Will it be good news in the form of cheaper mortgages, at the cost of even worse returns for savers, or will there be a base rate rise?
According to the latest inflation report, February 2009, inflation in December 2008 stood at 3.1%, which is significantly down on what it was the same time a year ago. The predictions stated in the report point to a gradual reduction in inflation over 2009 with it falling to below the Bank of England target (2%) by early 2010.
If this does happen, and the wider economy seems to be on the mend, then we could be in for a gradual increasing of the base rate from early 2010 onwards. However, predictions made in an inflation report published mid February 2009 will not necessarily still be valid come February 2010 - way back in January 2007 the outlook was still very rosy, the same time 2008 and things were somewhat bleaker.
My prediction is that the MPC will leave the base rate as it is at 1%, and wait until they have seen further evidence that the economy is starting to get better. They could be waiting a long time for that to happen, so we could be in for a prolonged period of low interest rates.
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on 04 Mar 2009 at 12:21 pm 1.Rob Lewis said …
I’m really not sure, maybe a 0.25% cut?
Some are predicting 0.5% off interest rates: http://www.financemarkets.co.uk/2009/03/04/analysts-expect-05-rate-cut-tomorrow/
on 04 Mar 2009 at 10:44 pm 2.cornish dragon said …
Any change will make negligible difference to anything. This pointless rearranging of the deck chairs I find diversionally amusing.
I was hoping for a great year of deflation but the Uk peso fell of a cliff and scuppered that ;(
When sovereign debt fails to find bond buyers ..( (witness German euro sale in Jan !) ( and the uk manages amazing not to go bust ) interest rates
will be heading hard and fast north similar to Icelands’ current rate of 18% with a delightful bout of hyper stagflation ( a great way to devalue debt btw!).
I want to read this book….
http://www.amazon.com/Second-Great-Depression-Warren-Brussee/dp/1591136881/ref=sr_1_11?ie=UTF8&s=books&qid=1236205269&sr=1-11
Does any one have a copy second hand and cheap for
a poor Austrian Dragon ???
CU
AD
on 05 Mar 2009 at 3:23 pm 3.John said …
Ah well Tristan, can’t get them all right. They went for a 0.5% drop.
on 05 Mar 2009 at 3:34 pm 4.Tristan said …
Hands up, I didn’t expect there to be another interest rate drop this month, really shocking considering how little effect it seems to be having on the economy. I know I’m not going out and spending all the extra money I have in my pocket from having a cheaper mortgage, and none of my friends are either.
on 15 Apr 2009 at 2:51 pm 5.How to Get Six Pack Fast said …
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