UK Interest Rates Trends September 2014

Steve Smith looks at data from the Bank of England.

The UK base rate remains at 0.5% per annum. The minutes of the September Monetary Policy Committee meeting show that the vote to hold at that rate was split exactly the same as in August with 7 members voting to hold and 2 members voting against preferring an increase to 0.75% per annum.

Recent commentary on UK base rates has pointed to inflation trends suggesting that the first increase could be deferred well into 2015. Whilst the MPC decisions are not changing 1 year GBP LIBOR continues to creep up and has risen by 0.26% per annum during 2014 to date.

Graph Interest rates September 2014.docx

3 month GBP LIBOR increased by 0.01% to 0.555% per annum in September whilst 6 month GBP LIBOR rose by 0.015% to 0.685% per annum.  1 year LIBOR rose by 0.035% per annum during September ending the month at 1.085%% per annum

Based on trends in GBP LIBOR the first increase in UK base rate now looks more likely to be in Q1 or possibly Q2 2015.  An increase in the UK Base Rate in 2014 is now very unlikely .

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