Interest rates may not rise up until Dec 2010 say Spreadex

Interest rates are widely expected to be held at 0.5% again on Thursday when the Bank of England’s Monetary Policy Committee announces its latest base rate decision.

And it could be quite some time yet until rates eventually begin to rise if indications from spread betting firm Spreadex are to be believed.

The firm allows investors to place bets on future LIBOR quotes – the interest rate at which banks lend to each other. And due to a lack of movement in the forthcoming months’ prices, customers have been requesting future prices as far out as December 2010, with the quote for that particular date predicting three month LIBOR to be at between 2.7 and 2.8% compared to the current 1.44% three month level.

Spreadex spokesman Andy MacKenzie said: ‘The big question for many homeowners and savers is ‘when will interest rates eventually start rising again from the current historic lows?’ and that’s what many of our clients are also trying to predict.’

‘We’ve had some customers requesting quotes for as far afield as 19 months time in order to find prices they feel are worth speculating on. While LIBOR rates are different from the base rate they still give a good indication of where levels will go and our quotes suggest there won’t be any great rise in rates for some time to come. This is not great news for savers looking to improve their returns, but it is reassuring for mortgage owners who may be fearful of payment hikes lying just around the corner.’

Editor’s note: Spreadex Limited is authorised and regulated by the Financial Services Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial deposit/stake. It may not be suitable for everyone, so please ensure you fully understand the risks involved.

Thoughts: A bit of public relations but interesting that Spreadex clients are not predicting any increases in interest rates until the end of next year.

Tags: interest rates, libor, spreadex

This entry was posted on Wednesday, May 6th, 2009 at 12:22 pm and is filed under Public Relations. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.