When if Ever Do You Think Savings Interest Rates Will Rise?
Ask a Question
I always see references to interest rates been used to slow inflation, so if not now, when.
My thoughts are that interest rates will almost definitely rise when inflation does and that inflation will rise after wages increase significally more than inflation does.
At the moment the low interest rates help those who are in debt (mortgages etc), but don't help those with any savings.
Hopefully things don't get out of hand and we return to the days in the 1970s and 80s when the mortgage interest rate was (in my case) 16% and even higher for many people.
I think we are safe from sixteen percent rates. I always expected rates around five percent, low interest rates driving property prices with people buying what they can afford as a monthly payment rather than seeing the total price. A world without inflation or interest would be an easier one to navigate.
Howmuch "A world without inflation or interest would be an easier one to navigate". It certainly would although a little interest would help the savers who let those perhaps needing help in buying a home to do so.
There's no easy answer
Read my comments below and you will see that "todays inflation " is different from previous "inflations " , ie not down to consumer spending (which can be controlled by higher interest rates ) . Raising base rates now would not curb the current inflation but would lead to many businesses going bust .
Howmuch Totally agree , no one can "afford" a £100 k house or a £500K one ? They can maybe "afford" £500 a month or maybe even £2000 a month mortgage ? So house prices are driven to a large extent by interest rates .
Perhaps understanding how it all knits together enables us to prepare ourselves a little for what could happen , and how the world economic situation can affect our lives and futures (totally outside our control ) .
They will rise (very slowly I'm afraid ) over the coming months but will get nowhere near inflation in the foreseeable future 
.
I could write an essay on this but will try to summarise .
Inflation (in the past ) is caused by the willingness of consumers to spend (including via credit cards and loans ) . So by increasing base rates central banks could curb consumer spending by making borrowing money more expensive .
Unfortunately this also hits companies wishing to borrow to keep going , let alone expand . Therefore Central Banks worldwide are keeping interest rates unfeasibly low to ensure that the companies that fuel our economies keep going with "cheap money "
Currently inflation is being fuelled by the surge in energy prices (we all know about that ! ) whether it is petrol/diesel for transporting goods or domestic gas and electricity ( which factories /warehouses etc also have to pay ).
Obviously COVID has not helped and the furlough scheme (Paying many workers to do nothing for many months ) has become ingrained on populations throughout the developed world . No surprise really that in the UK , the EU , the USA businesses are struggling to get folks back to work even with hugely improved pay and conditions .
It's the way economics work - basically supply and demand . Can't do much without workers whether they are waiters or lorry drivers (both in very short supply ) so they must be paid more and that obviously feeds inflation .
So a double or treble whammy adding to inflation ! But base rates (on which savings and borrowing rates are based ) cannot be raised as many businesses (most hugely indebted ) would soon go bust .
Hope that explains it a little ? I understand it , but I'm afraid I don't have the answer . Hopefully inflation will peak at about 5% early next year and then decrease to the 2% recent norm (once the factors I have mentioned dissipate ).
May I request that all the decent members who saw yet another disgusting ageist attempt (with some very questionable language) to disrupt this topic and also the moderator who removed it. (but not before I'd copied it into my complaint) back up my complaint about that member's actions.
Twice in the past week I've reported his disruption and offensive comments. He seems intent on disrupting any topic I comment on and many others too.
I read an article yesterday saying interests will most probably rise next year. I know I will benefit but I hope they don’t for all those keeping their heads above water after all the power increases. The last thing the majority need is higher mortgage rates.
True, I expect wages to rise as cost of living increases. I do not see benefits rising to keep up as they have not for a number of years ( I include contributory and non contributory). The people I know with large amounts of saving simply stop spending when the rates are this low and actually increase the rate that they save. To me this just slows any real recovery and reduces economic activity that in turn reduces governments capacity to take a cut. We need the people that can spend to spend ideally on services in order redistribute wealth .
I hope they do rise next year for those he relying on the interest and that fuel prices drop or at least the tax on them is reduced to reflect the increased revenue from higher prices.
High fuel prices increase the price of everything, short term fix for them long term pain for everyone. Fuel to me is the lubricant of an economy, expect friction.
Join for free to get genuine deals, money saving advice and help from our friendly community
Chief Bargain Hunter
