For more info: www. cfsorg. com |
“ You have a lag between the rates going up and them impacting on company balance sheets because companies tend to work on fixed interest rates, so they lock into a debt rather than being on a variable rate. It’ s only when their debt needs to be rebroked that they’ ll have to suffer the consequences of the higher interest rates.
“ Also, it means they’ ve already had a period of higher earnings without the impact of interest rates reducing spending. Interest rates going up means people’ s credit card and mortgage debts become more of a burden and that means they’ ve got less to spend elsewhere. But it takes a while before they realise they have to cut their spending. So you do have a good six to 12 months before it impacts purchasing.
“ The MPC is meant to set interest rates looking forward 12 months on inflation but because of Brexit and concerns over the strength of the UK economy they’ ve allowed inflation to get ahead of itself, above their target, and now they’ re trying
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to chase their tail a little bit so that’ s why we’ ve had a bit of a jump in interest rates. It doesn’ t necessarily mean bad news for investment.”
“ It doesn’ t necessarily mean bad news for investment”
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For more info: www. swbf. co. uk |
“ The base rate rise will increase costs of finance if your business loan is linked to base rate, however based on the lending criteria, the banks will have built in a contingency for interest rate rises and with a rise of only 0.25 % you shouldn’ t find this too onerous. Those businesses who have LIBOR-linked lending will probably find that LIBOR will follow suit shortly.
“ On the flip side, the fact the rates have risen should give a bigger confidence to the market as it is a sign of strength, but again I think the smaller, more local businesses won’ t feel any effect of this and they will only be affected with an increased monthly cost.”
“ The fact the rates have risen should give a bigger confidence to the market”
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