Interest rates need to fall for the cost of living crisis abates - an expert explains - video Dailymotion

National World - LocalTV

Kevin Mountford, Co-founder of financial savings group Raisin Uk explains what the impact of the recent decision by the Bank of England to freeze rates, will mean for savers and borrowers and indeed the wider economy.

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00:00 I think there's still nervousness around inflation and we saw the Fed in the US earlier this

00:08 week keeping interest rates at the same level. So that, you know, it is critical that the

00:13 government or the Bank of England gets the inflation rate to 2%. Now there's optimism

00:20 that that is achievable.

00:21 Just a few days ago, the Bank of England made the decision to hold interest rates at 5.25%

00:29 level the fifth time in a row, with assurances from the organisation that they will go lower

00:35 later in the year.

00:37 What it means in reality is that there is an expectation in the market that interest

00:43 rates will start to drop this year. I still think there's mixed opinions, but I think

00:49 that there is a political will, as much as anything else, for it to happen maybe by the

00:55 summer. That then makes people feel a bit more confident and I think it boosts optimism

01:02 within the business sector, so employment and all of that.

01:06 Many people with a mortgage across our region and indeed the whole UK will be impacted by

01:11 continuing higher rates. Those higher payments mean less to spend and support the economy

01:17 elsewhere. For savers though, it's better news after years of lean returns.

01:23 I think there's something like a million customers who are on fixed rate mortgages that are due

01:27 to mature over the coming months. So those individuals are going to keep a really close

01:34 eye on the situation.

01:35 I think from a saver's point of view, and I saw some research, 80% of savings products

01:41 are paying over inflation. So that puts a bit more money back in the saver's pocket

01:48 in real terms. And again, going back to Amelia's point, with salary increases, etc, that's

01:54 why there's a nervousness. A bit more money in the pocket might mean we spend a bit more.

Interest rates need to fall for the cost of living crisis abates - an expert explains

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