Monday, December 23, 2024
Monday, December 23, 2024

Investors bet interest rates have peaked

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Victoria Smith
Victoria Smithhttps://dailyobserver.uk
A well organized Business Reporter experienced in writing financial articles, e-books, essays, editorial pieces, press releases. 15+ years of experience in writing and editing financial news Excellent knowledge of the stock market functions and financial world. Skilled in researching and collecting information on business world important happenings and events.

The Daily Observer London Desk: Reporter- Victoria Smith

Borrowers look set for some much-needed respite as investors bet interest rates have peaked after a series of painful hikes.

With storm clouds gathering over the global economy, official figures yesterday showed the UK jobs market is slowing while the private sector suffered a third month of decline.

Against this uncertain backdrop, bets on financial markets suggest there is a 90pc chance interest rates will remain unchanged when Bank of England officials meet next week.

Against this uncertain backdrop, bets on financial markets suggest there is a 90pc chance interest rates will remain unchanged when Bank of England officials meet next week

The chances of further rate hikes next year have also diminished with investors betting they will not rise above the current level of 5.25pc.

That would be a relief for millions of borrowers who have seen mortgage costs soar – though many will be pinning their hopes on rate cuts to ease pressure on family finances.

Daniel Mahoney, a UK economist at banking group Handelsbanken, said: ‘Markets now think it is more likely than not that 5.25pc is, indeed, the peak base rate for this cycle, and this is a position that we agree with.’

The Bank raised interest rates on 14 consecutive occasions between December 2021 and August 2023 – taking them from 0.1pc to 5.25pc.

That pushed up the cost of mortgages and other loans for millions of households and businesses – and has slowed the economy in the process. A report by the Office for National Statistics yesterday showed the jobless rate edged up to 4.2pc in the three months to August from 4pc in the previous three months.

Meanwhile, businesses reported a decline in activity this month and said cost pressures have cooled further.

S&P Global’s Purchasing Managers’ Index (PMI) of activity in the private sector came in at 48.6 this month.

Energy Bills Shock

The worst is still to come for households struggling with energy bills, the boss of British Gas has warned.

Chris O’Shea, chief executive of the supplier’s owner Centrica, told Bloomberg: ‘My worry is that the worst is still to come.

‘We are seeing direct debits being cancelled. We are seeing people struggling.’

The energy price cap set by Ofgem was reduced to £1,834 a year this month, the first time it dropped below the £2,000 mark since April 2022.

Yet it is forecast to rise again to £1,976 in the first three months of next year, according to analysts at investment bank Investec.

Victoria Smith
Victoria Smithhttps://dailyobserver.uk
A well organized Business Reporter experienced in writing financial articles, e-books, essays, editorial pieces, press releases. 15+ years of experience in writing and editing financial news Excellent knowledge of the stock market functions and financial world. Skilled in researching and collecting information on business world important happenings and events.

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Victoria Smith
Victoria Smithhttps://dailyobserver.uk
A well organized Business Reporter experienced in writing financial articles, e-books, essays, editorial pieces, press releases. 15+ years of experience in writing and editing financial news Excellent knowledge of the stock market functions and financial world. Skilled in researching and collecting information on business world important happenings and events.