Independent Financial Life Planners Bishop's Stortford: What will rising Interest rates mean?

Thursday, 12 December 2013

What will rising Interest rates mean?

Savers have long been waiting for interest rates to recover and the UK could be the first to see rising interest rates, , Fidelity’s Andrew Wells says a “fair amount” of inflation is likely for Britain in 2014 and has a chance of picking up as the year progresses, as shown by the country’s breakeven rate of 2.8 per cent. The US breakeven is 1.9 per cent and the Eurozone’s sits at 0.8 per cent.

Recently Axa Investment fixed income CIO Chris Iggo said there was a 60 per cent chance of the Bank of England raising rates next year due to recent transportation and energy price hikes. That compares with a one-in-10 chance that the US will move the same way, while other large developed economies are in no position to begin increasing rates.

Rising net debt to earnings is the concern and trying to make sense of what it will bring for investment can be tricky. Eurozone high yield corporate bonds were particularly attractive due to the exceptionally-low inflation expectations but then the US should begin tapering its QE next year, which will be prefaced with much more delicate groundwork by the Federal Reserve,. “The volatility that we had in 2013, I think the mismanagement of the messaging by the Fed was a clear mistake and I think that they have learnt that lesson.” Forward guidance and a “more soothing” communication to bond markets about the separation of tapering and normalising interest rates should make the market “much more sanguine when the taper begins". Enables IFA’s in Bishops Stortford can try and help you navigate the best path for your funds.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

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IFA Bishop's Stortford

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