Every few weeks the same drama plays out on the evening news. The central bank, which sets the base rate (the benchmark price of borrowing money across the economy), stands at the window watching inflation, the steady rise in prices that has been quietly shrinking everyone’s shopping basket. Inflation keeps texting. The central bank keeps replying. Meanwhile recession, the slump in output and jobs, lurks in the car park offering to take everyone somewhere quieter.
According to the BBC’s economics editor, Faisal Islam, one more rate rise is likely, and then that will be all. Read it like a confession from a character who has promised this since the last series. One more push, and then the central bank will stop. The audience has heard that line before, usually in the episode right before someone gets dumped.
For you, the practical upshot is simple. If your mortgage is on a variable rate, one more rise means one more increase in your monthly payment, probably the last for a while. If your savings sit in an easy-access account, that rate should drift up too, though rarely as fast as the adverts suggest. Anyone on a fixed deal has already priced in most of the drama. Do not rush into anything because a plot twist is supposedly coming. In finance, the plot twist usually arrives after you have already bought the wrong ticket.
Stay tuned. Same time next quarter.