Interest Rate Predictions Tristan on 22 Nov 2009 08:09 pm
Interest Rate Predictions For 2010
I can hardly believe that next month is December, which means that 2010 is nearly upon us. At the start of this year I assumed that interest rates would only be low for a few months before rising sharply, back to a more normal range of 3-5% - how wrong I have been!
With the economy still not fully recovered from the effects of the credit crunch, and many experts believing that we still have more doom and gloom to come, I can only imagine that the Bank of England base rate will not be rising for a long time to come.
The worst case scenario from what I can make of it all is that the base rate will start to rise sometime in the 2nd quarter of 2010, but the best case scenario is that all through 2010 the base rate will remain at it’s current low level.
For the base rate to rise, the economy has to start inflating again, something that it shows no signs of doing just yet. And even when the economy does start to grow, it will be quite a while before the inflation rate exceeds the 3% maximum target set by the Bank of England. With that in mind I think I have to revise my earlier interest rate predictions for 2009 - 2010, which I predicted the base rate would rise steadily during 2010. I believe the economy hasn’t recovered as quickly as was predicted back in January of this year, and as such the base rate will have to remain at its current level for quite some time to come.
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