CBI Predicts Interest Rate Rise Q1 2015

CBI Predicts Interest Rate Rise Q1 2015.

The Confederation of British Industry (CBI) has forecast that the British economy with continue to grow through 2014 and 2015 with this year seeing growth of 3%.

This higher than originally predicted growth, and indeed a revised up forecast by the CBI from 2.7%. has led the CBI to predict an early rise in interest rates.

The CBI forecasts Bank of England base interest rates will in the first three months of 2015 by 0.25% to 0.75%pa.

Comment

We have long predicted that rates will rise in 2015, but have always suggested after the general election in May 2015. Whilst we accept the economy may be growing faster than expected, we are not so sure that the so called independent Bank of England, will find other excuses to not increase rates.

Whether the CBI are right for early 2015 rises or we are right for 2nd quarter rises remains to be seen, but all commentators expect a rise in 2015. It is just a question of when.

For savers, this may bring some relief, but for mortgage borrowers we cannot see the rate rises having a major impact on house prices as a 0.25% rise will not dramatically affect monthly repayments given that many borrowers are locking into fixed rates anyway