How high will interest rates go... and why are they still going up?

This is Money Podcast

This is Money

Business News, Business, Investing, News

4.1 • 650 Ratings

🗓️ 12 May 2023

⏱️ 49 minutes

🔗️ Recording | iTunes | RSS

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Summary

And there it was, another interest rate hike.

Another quarter point move up seems almost commonplace now but cast your mind back to the era after the financial crisis and we had to wait nearly ten years for the base rate to climb above its 0.5 per cent 'emergency level'.

It cut got first and then base rate got all the way to the heady heights of 0.75 per cent, before it was cut again when Covid hit.

Yet, less than 18 months since the Bank of England started raising rates in December 2021, base rate has rocketed from 0.1 per cent to 4.5 per cent.

The rate itself is relatively low in historic terms, the magnitude of the rise is not.

So, are the Bank's ratesetters right to keep voting for hikes, has the full pain been felt yet, and why would you do this when all the forecasts suggest inflation is soon to nosedive?

On this podcast, Georgie Frost, Tanya Jefferies and Simon Lambert discuss the latest rate rise and how high interest rates will go.

Plus, is the return of the 100 per cent mortgage absolute madness, a helping hand for trapped renters, or something in the middle of all that?

Why people should claim pension credit or help their friends or relatives who could.

And finally, not only will it lack the crisp one-liners of Succession, but an inheritance drama is not something you want to get into, so how can people avoid one?

Transcript

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0:00.0	Welcome to This Is Money Podcast. I'm Georgie Frost and joining me and Simon Lambert today is Pensions and Investments editor Tanya Jeffries.
0:10.7	And coming up, the Bank of England hikes again. Are we nearly there yet? A hundred percent mortgages, everyone's talking about Skipton's New Deal, a good idea or a catastrophe waiting to happen.
0:22.0	Listen up as Tanya has some important news on pension credit,
0:25.4	and it's the Hollywood drama that you don't want art to imitate life.
0:29.5	We tell you how to avoid a succession-style inheritance war with your nearest and dearest.
0:34.7	Don't be getting to up to date with all the latest breaking money news.
0:37.0	Just go to this ismoney.co.uk or download the app.
0:41.5	Don't forget, you can stay on top of what's going on in the markets by tuning in to the
0:45.1	Digest and Invest podcast by Itaro. Go to your regular podcast platform and listen on the go.
0:49.8	Digest and Invest by Itoro. The podcast for those interested in trading and investing.
1:00.6	But first, rates have been raised again the 12th time on the bounce from 4.25 to 4.5 basis points.
1:05.5	No great surprise. It was food prices what done it, largely, apparently.
1:10.2	But economists and journals less interested in numbers, more in the minutes.
1:16.0	So what did the Bank of England think was coming down the line and how might they respond to it?
1:19.5	More rate rises or a reprie for struggling families.
1:21.8	Welcome to you both, Simon Firstly.
1:25.7	Why the rise, aren't we feeling enough financial pain already?
1:29.2	Was it a good call, a bad call, a pointless call?
1:35.6	So the answer is no. The Bank of England doesn't actually think that we are feeling quite enough pain yet. That is why the Bank of England has raised the base rate. The idea behind
1:40.8	which is that it feeds through and increases the cost of borrowing, which lowers
1:46.2	demand for borrowing, which slows the volume of money going into the economy from loans being
1:52.2	created and the amount of money going around and drags down inflation.
	...

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