Sterling Properties

Interest rates to drop further?

Posted on Jun 3rd 2015

After the past few years of speculation that interest rates will imminently rise from their historic low of 0.5%, the latest speculation is that rates may lower in the light of the news report in March that UK inflation fell to zero in February.

This is the lowest rate of Consumer Prices Index inflation since estimates of the measure began in 1988, and indicates that the cost of living is the same as it was a year earlier.

With inflation well below the 2% target, the Bank of England’s Chief Economist, Andy Haldane, has stated (providing his personal view rather than the official view of the Bank) that there is a real chance that Bank Rate will be cut – fuelling speculation that the direction of rate setting policy may be about to change.

What is certainly true is that an interest rate rise looks a lot further away at this point than it did a few months ago, which will reassure landlords who mortgages are set as a percentage over the BoE base rate.

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