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Rate Expectations - August 2017


At Kensington, we have access to the latest data from the financial markets and we use this intelligence to predict changes in interest rates. These forecasts inform our product development and we believe they can also be useful for you.

KMC_CM_6000_006_600pixel_Rate_imageDownload our August forecast to find out more about our latest predictions for the economic outlook.  As with any prediction, these are based on current circumstances and are likely to change.

The story behind the numbers

August marks a year since the base rate was lowered to 0.25%, but despite Brexit-based uncertainty the economy has remained resilient and commentators continue to speculate about when rates will rise again. At their August meeting, the Monetary Policy Committee (MPC) took a dovish tone, as expected, with 6-2 voting to hold the base rate.

The MPC also voted unanimously to continue the tightening of monetary policy started one year ago by maintaining the current level of corporate and government bond purchases. However, they decided not to extend the Term Funding Scheme which will end in February 2018 as initially planned.

We expect a rise in the base rate to 0.5% within a year. That rate would remain unchanged until 2020, when it would rise to 0.75%. For LIBOR, we expect to broadly follow the base rate, rising to around 0.75% in two years.

Data produced 3rd August 2017