An interesting blog about a little bit of interest being of interest and the interest in the interest rate rising

In these unprecedented times, people are looking for alternatives to interest from traditional bank accounts given the current bank of England base rate of 0.1%.

However, many people are still holding out for interest rate rises.

I recall in a previous life (at a well known Insurance Company) inflation was referred to as the silent embezzler.

Put simply, £10,000 in the bank today will generally buy you less than it would say, 5 years ago.

So the absolute minimum for any money, is to grow in line with inflation.

That however, is easier said than done in a deposit account when the rate of inflation is significantly higher than The Bank of England base rate (and the vast majority of deposit rates).

So, when do we see interest rates rising, returning to normal?

I used to say at meetings that interest rate rises were always six months away, a bit like the pub which advertises free beer tomorrow.  Neither ever seem to arrive.

After the financial crisis of 2008-09, what appeared to be temporary cut in the bank of England base rate, saw the rate drop to 0.5%. In the twelve years since, the rate has not once risen to 1% and currently sits at an all time low of 0.1% with talk of negative interest rates a real possibility!

Can interest rates rise? Given the amount of borrowing by central governments around the world, is this a realistic possibility?

Another astounding quote heard in financial circles in the last few weeks.

Should the cost of borrowing increase by 0.5%pa, the additional annual cost to The US Treasury would be equal to the Country’s entire military budget for the year.

I guess the interest rate rises are still 6 months away!

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