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Wednesday, June 26, 2013

The Dangers Posed By Rising Interest Rates

The Bank of England's Financial Stability reports arises a red flag about the dangers from a rise in interest rates.

The Executive Summary notes:
"In the near term, risks could crystallise if global long-term interest rates were to rise abruptly from current still historically low levels.."
Hidden away in the report itself, the Bank notes that:
"The impact of higher global interest rates on borrowers will depend on the cause of the increase....a significant cohort of UK borrowers could experience financial difficulties if interest rates were to rise during a period of subdued income growth.."
Will interest rates rise?

Sir Mervyn King, thinks not (not at least in the foreseeable future).


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