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Investors not holding their breath for a Bank of England rate rise
The majority of investors aren’t expecting the Bank of England to raise the base rate in the next three months, according the Q2 Investor Barometer from Assetz Capital.
The peer-to-peer lending platform canvasses the views of its investors every quarter, and they were asked if they think the Bank of England will raise rates from 0.5% in the next three months. 52% believe they won’t, while 25% think they will, with 24% not sure.
The base rate has remained at 0.5% since March 2009, apart from falling briefly to 0.25% between August 2016 and October 2017.
Stuart Law, CEO at Assetz Capital said: “Our investors don’t believe a rate rise will be forthcoming given the current economic climate. Until the economy picks up significantly interest rates will remain low, but we won’t see an economic turnaround until the government understands properly what will fuel it – which is easily accessible growth capital for ambitious businesses that will grow jobs and wages.
“When the base rate rises, so should savings rates. But history shows us that this very rarely fully happens with banks holding back part of the base rate rise for themselves. Unfortunately savers’ expectations that high-street banks may provide returns that outstrip inflation are likely to be found wanting in the months and probably years to come. It must be galling for people to hear Mark Carney, the Governor of the Bank of England, already anticipating rates falling again if the currently expected disorderly exit from Europe happens – and that could mean negative interest rates this time around.”
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