The Office for Budget Responsibility does not think interest rates are going to rise – so can we stop obsessing about it?

Posted on July 14 2020

I wrote yesterday that the chance of an interest rate rise is remote in the extreme. About 10,000 people have read that blog post now.

I note the Office for Budget Responsibility agree with me. This is their forecast today for the next few years:

They're suggesting rates might fall to 0.0% i.e. nothing.

And then they might increase to 0.2% over five years.

In other words, negative real interest rates are here to stay for now.

If you need elaboration, this is it, including their gilt rate forecast:

Note they're suggesting a rate in 2025 of maybe 0.5% on gilts.

Would the debt fetishists please take note?

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3 Responses

  1. Jane Macdonald says:
    July 14 2020 at 4:42 pm

    The curves slop upwards – rates are expected to rise.

    • Richard Murphy says:
      July 14 2020 at 5:37 pm

      If you really think 0.2% makes a difference – yes

      But it also proves that you really are unable to spot what is important

      Please go away now

      I have no time for fools

    • Johan G says:
      July 15 2020 at 2:20 pm

      Ah yes, a positive gradient of ~0.08%/year.

      How very substantive…