B of E base rate - where's it heading longer term...

[Sarah_W]

We've ben used to it being about 5% over teh past decade, but going back to the 80s and 70s, it has averaged about 10%. We're soon going to be in levels of national debt that are nearer the 70s and early 80s and we've just had a boom decade with record low national debt that isn't going to be repeated in the coming decade.

What I'm wondering is why interest rates shouldn't go back to their long term average of about 10% when teh country is in a dire economic state as we soon will be? For thsoe who work in teh markets and have studied economics, where do you think rates will be in say 5 years time?

[grumbledoak]

Well, it can only go up.

With Winky's cataclysmic management of the economy and the slump of sterling we'll get inflation (food and energy are largely imported). Interest rates will follow.

I'd bet good money on over 10%.

[s2art]

I can certainly see inflation rising, but interest rates going to 10%? I think not. Basically we will have rising unemployment, high taxes and a flat economy for some time. We could even see a rates lower than inflation for some time. My guess is less than 5% for a few years.