What is the future of interest rates?

Monday 09 November 2015  / Ruth Montia

interest_rates

The latest Bank of England data has been interpreted by commentators within the industry that interest rates may not rise early next year and that they may not even rise at all until 2017.

In the quarterly Inflation Report produced by the bank, they have noted that even if interest rates remain unchanged over a year, inflation would only just rise above its 2.0% target.

Below are the comments given:

Savills head of residential research, Lucian Cook has warned that “The timing of the first and subsequent rate rises is therefore critical to market sentiment. Too much too soon would curtail the recovery of some markets, but if rates remain low for too long house prices could rise to a level that would become unsustainable”.

Chief UK economist at IHS Global Insight, Howard Archer has admitted “The first interest rate hike from 0.50% to 0.75% is still most likely to happen in May 2016 – but the risks now seem to be that the increase could be later than this rather than before it. As things currently stand, an interest rate hike in the first quarter of 2016 looks unlikely”.

Aberdeen Asset Management Economist, Paul Diggle has said “That magic first rate rise has been kicked into the long grass once again. Only a few months ago, the Bank was saying that inflation wasn’t picking up because of the low oil price. Now it’s emerging markets. You have to wonder what their next reason will be”.