Interesting

If you want to learn a new swear word or two, simply ask anyone over the age of 60 what they think of the interest rate on their savings. You might also want to duck as well……it will probably get physical.

The last decade has seen the Bank of England keep interest rates at historically low levels for an unprecedented period. Great news for borrowers……dreadful news for savers. But that could be changing thanks to the current rate of inflation hitting 2.9% recently. 

The general economic policy of controlling inflation is to use interest rates. Putting interest rates up will cause borrowers to have less money in their pocket, they spend less and then inflation falls. Simple (well in theory rather than practice at least!). With inflation above the Bank of England’s target of 2.0%, the shuffling of papers has started at the Monetary Policy Committee on whether to increase interest rates. 

Whilst the recent monthly meeting of the nine-strong Monetary Policy Committee voted 7-2 to keep interest rates on hold at 0.25%, the language being used suggested that the possibility of an interest rate rise “has definitely increased”. 

Just a suggestion of an interest rate rise was enough to send the pound to a 15-month high against the dollar. Why wait for fact when the rumour is ‘sexy’ enough? 

Whilst the times aren’t changing yet, it is clear the economic super-tanker is moving……you’ve been warned borrowers!