Interest rate rises on the horizon

After more than six years sitting at less than 0.5%, arguments for an imminent interest rate rise are becoming stronger. Of course, the Bank of England’s job is to look further ahead than the rest of us, and act with more caution, but at its Monetary Policy Committee meeting in August only one member voted in favour of a rise, contrary to market expectations that two or even three members would express support. Mark Carney himself said that the decision will “come into sharper relief around the turn of the year” and when rates do go up, we won’t be looking at more than fractions of a percentage point, and certainly nowhere near the January 1985 peak of 13.875%. What’s more important, according to many, is that the first rate rise is effectively a starting gun – it then becomes a question of how quickly rates rise after that and how well businesses are set up to respond.