Friday, January 8, 2010

Some fund managers anticipating 1.5% interest rate rise

Woodford: “High probability” UK will be downgraded

Invesco Perpetual’s Neil Woodford believes there is a high probability of the UK seeing its AAA rating downgraded if the government does not address the Budget deficit. Speaking in a conference call for investors this morning, Woodford said a downgrade by the ratings agencies could lead to serious consequences, including downwards pressure on sterling.......“The consequences would be pretty tough as we would end up paying more for our borrowing, and there is the external perception of the economy. Some pressure would be brought to bear on the currency - it has already taken a knock but it could fall further.”

Posted by jack c @ 01:22 PM (1817 views)
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7 thoughts on “Some fund managers anticipating 1.5% interest rate rise

  • I think that 1.5% is far too low, given the scale of the debt. Try something around 5%.

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  • hpwatcher – agreed, they are IMO being to optimistic – the markets are going to decide where the rate settles and it will IMO be higher than 2% base.

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  • hpwatcher – agreed, they are IMO being to optimistic – the markets are going to decide where the rate settles and it will IMO be higher than 2% base.

    Good point, I suppose it depends on how much the government is prepared to steal from savers to keep the rates artificially low.

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  • Disagree. The $ £ € are all tanking – where are the speculators going to park?
    China will buy $ to save upward revision…….and what loony would invest zillions in Roubles, Rupees or Reais?
    Strange times – normal rules suspended.

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  • Disagree. The $ £ € are all tanking – where are the speculators going to park?

    I would hardly use the word ‘tanking’ just yet. Soon, but not yet 😉

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  • mark wadsworth says:

    The current interest rate on ten-year gilts is just over 4%, so 5% is not an unrealistic expectation.

    But this still won’t stop ’em robbing savers to prop up borrowers, making repo’s illegal, subsidising mortgage payments, cutting council tax or stamp duty etc etc.

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  • Interset rates will go up after the elections in May-ensuring that downgrading does not occur (whoever wins the election).
    However if we end up with a hung Parliament this could be a real disasater in terms of confidence that the government will not be able to make the tough decisions it needs to make.
    This needs to be spelt out to the general public-it does not matter who wins as long as they win big.

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