Interest rates to fall. But how soon?
The above graphic certainly illustrates how rapidly interest rates have risen in the past year and certainly this has affected the appetite for borrowing by not just mortgage holders, but SMEs too. Last year was a very good year personally for my brokering ending with a very substantial arrangement across USA, Canada and Europe for a truly excellent client but overall there was a sense that businesses were holding back from investment or just straightforward day to day cash flow borrowing (not always the same thing)
The good news is that interest rates seem destined to fall fairly quickly and fairly soon. Goldman Sachs have predicted significant cuts in May but with inflation falling faster than expected, I’ve heard predictions of sooner from good sources within the media. Lets hope so
This will be welcome news but as mentioned previously, too late to save this administration in the next election. Jim Callaghans perceptive “sea change” pre Thatcher quote comes to mind. Nothing will swing the electorate back to a deeply disliked party
As an aside, for this who have an interest in the effect of interest rates on economies, I can seriously recommend this fabulous read. An entertaining an engrossing read on the history interest rates? An oxymoron? No and to give an example, who in our line of work could resist wanting to know the psychology and disfunction (far from the only example) behind the Japanese lenders lending at lower rates to technically insolvent businesses than to profitable ones?
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