Have interest rates peaked - and what happens next?

This is Money Podcast

This is Money

Business News, Business, Investing, News

4.1 • 650 Ratings

🗓️ 3 November 2023

⏱️ 53 minutes

🔗️ Recording | iTunes | RSS

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Summary

Have interest rates peaked?

After an inflation spike rudely awoke them from their slumbers, the Bank of England and the US Federal Reserve have shown us that rate hiking can be a difficult habit to break.

But 14 consecutive rate rises into an astonishing run from 0.1 per cent to 5.25 per cent for the base rate, the Bank of England suddenly paused six weeks ago. And then, on Thursday, it did it again.

On both of those occasions, the Fed had also just done the same thing across the Atlantic.

So, are we finally there? When does a pause become a peak? And if we have reached the top of the interest rate cycle, what happens next?

On this episode of This is Money podcast, Georgie Frost, Helen Crane and Simon Lambert look at the decision to hold rates again and what it means for savers, mortgage borrowers and investors.

Plus, what are Andrew Bailey’s Bank of England and Jay Powell’s Fed telling us about their respective economies – and how divergent are the paths of the UK and US?

Also on this episode, Crane on the Case digs into a how an entirely explainable and obvious error somehow led to a reader facing more than £8,000 of fines and Transport for London refusing to budge… until we stepped in.

Plus, some previous high-flying investment trusts are going cheap, so is this the time to invest? Simon takes a look.

And finally, what have the Premium Bonds and a pop quiz on number one hits in 2000 and 2008 got to do with each other?

Listen to the end if you want to find out why you need to know that the UK number one in February 2008, was Duffy singing Mercy.

Transcript

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0:00.0	Welcome to This Is Money podcast. I'm Georgie Frost and joining me and Simon Labbert today is Helen Crane.
0:08.7	And coming up, the Bank of England holds again. So have interest rates peaked?
0:13.4	When will they start to fall? And is there a glimmer of hope for first-time buyers?
0:18.0	Also today Crane is back on the case, helping a reader who found out they
0:21.9	owed over $8,000 in driving fines after their name was spelled wrong. Plus, the best investment
0:29.0	trusts of the past decade are now going cheap and the luckiest premium bond winners of 2023.
0:35.1	But who won the jackpot with the smallest holding? Don't forget to stay up to date
0:39.0	with all the latest breaking money news. Just go to this ismoney.co.uk or download the app.
0:45.0	Don't forget, you can stay on top of what's going on in the markets by tuning in to the
0:49.1	Digest and Invest Podcast by Itaro. Go to your regular podcast platform and listen on the go.
0:53.7	Digest and Invest by Itoro, the podcast your regular podcast platform and listen on the go. Digest and invest by
0:54.7	Itora. The podcast for those interested in trading and investing. But first, as widely
1:00.2	expected rates were held for the second meeting in a row, at 5.25%. So is that it? Have we peaked?
1:09.5	And what does it mean for borrowers, savers, investors and the wider economy?
1:13.7	Simon, Helen, welcome Simon first. Another hold. Why is that?
1:19.8	It's another hold. That's two meetings in a row after 14 rises in a row, which is quite some run of rate rises, if we're going to be entirely
1:30.8	honest. Interest rates, historically speaking, at the moment, at 5.25%, but that's an awful lot higher
1:37.6	than the 0.1% that they started at. And if you take the order of magnitude with which interest rates of risen from that,
1:46.0	almost zero number to the 5.25% that they're at now, this is by far the biggest and fastest
1:52.8	series of rate rises that we've ever seen in this country. The question on many people's
1:58.6	minds is, has all of the effect of this filtered through?
2:04.2	People have been increasingly asking that question.
	...

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