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.
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