How Long Until Interest Rates Rise?

The Bank of England has held interest rates at the record low level of 0.5% for the 65th month in a row. But when should savers and investors be ready for a change?

Emma Wall 7 August, 2014 | 4:20PM
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Interest rates will not be rising this month, as the Bank of England’s Monetary Policy Committee at its meeting today voted to maintain base rate at 0.5%. This is the 65th month in a row that the Bank has kept rates at a record low, but many are predicting this trend will reverse soon.

Last summer the then newly-appointed Bank governor Mark Carney introduced forward guidance to give the market, savers and borrowers some stability and predictability to the Bank’s rate plans.

However, the threshold of low inflation, and low unemployment were hit years sooner than expected and Carney was forced to abandon so prescriptive a plan. He has subsequently indicated that interest rates will rise in the next 12 months, and the rise will be a slow and steady trajectory. In June, Carney indicated that interest rates would rise at the end of this year, with economists predicting rises of 25 basis points every three months.

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Emma Wall  is former Senior International Editor for Morningstar

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