mark-carney-interest-rates-on-hold

 

Will Interest Rates Change In 2015?

There was much speculation in 2014 with regards to interest rates going up. The experts said that they would likely go up in the spring to summer of 2015 and some believed that it would be the summer of 2015. Despite the experts coming out one after one with their expert opinions they were in fact all wrong and according to leading economists the recent changes in the global economy mean that inteteest rates are unlikley to change until 2016.

Most of us with mortgages will breath a sigh if relief as lowere mortgage payments are always welcomed.The same can't be said if you are a saver and have seen rates plummett over the last 6 years but that is another matter for aother post.

It is very likely that rates would have gone up if the global economy had not worsened. We have very low inflation of just 0.3% with some economists suggesting that this could even fall further. The Bank of England has said that low inflation is a good thing but that deflation is a bad thing. Our European partners are now experiencing deflation and have now started their own process of printing money.

It is fair to say that there is a good chance that we will follow suit and soon also be experiencing some deflation particularly if the oil price continues to fall or does not increase from its current price. This according to the Bank of England is the reason that rates could stay where they are for another 12 months. Nobody could foresee the collapse in oil prices which according to experts is why the rate of inflation across Europe is so low.

According to experts as long as we have very low inflation levels we are likely to tee continued inactivity from the Bank of England. The Governor of the Bank of England has said that if deflation became entrenched the bank could be forced to reduce rates further and may deliver more qualitative easing. It did go on to say that this was unlikely and that the next move for interest rates was likely to be up. Investors are speculating that interest rates will not go up until 2016.

 

inflation-report