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Are better Interest rates on their way at last?

Good news may be on the way for savers now though, as, for the first time in nearly 10 years, the monetary policy committee (MPC) had a split decision of 5-3 in favour of leaving interest rates as they are when the vote was made on whether to increase interest rates last week.  It was believed the MPC would vote 7-1 to maintain the rate at its post-Brexit referendum level of 0.25%.

Members of the Committee, Ian McCafferty and Michael Saunders joined outgoing rate rise advocate Kristin Forbes in supporting an increase back to the post-crisis level of 0.5%.  It was the closest the MPC has come to supporting a rise since 2007 because it currently has only eight members following Charlotte Hogg’s departure in March.

In the minutes of the rate-setting meeting, the Bank said it now expected inflation to exceed 3% by the autumn –  higher than it had forecast a month ago – having reached an annual rate of 2.9% in May.

This announcement had an immediate effect on the Pound/Euro rate.  The levels were dropping alarmingly low again to the 1.1 level but this announcement saw the rate rise immediately back to 1.4.  This is very positive for the Pound as it would indicate that it would become stronger should the interest rates go up, which in turn could provide Expat retirees with some welcome extra cash in their pockets on two fronts (better exchange rate and better interest rates).

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

Other News

Inflation – The Asset Eroding Thorn in your Low-risk Investment Strategy

Retired coupleBritish people are living longer than ever before – according to the Office of National Statistics, life expectancy is likely to rise to 85 by 2040. And this figure is an average; if you are physically healthy you can realistically expect to live one or more decades longer, particularly if you have a family history of longevity.

And what if you live abroad in a warm and agreeable climate? Well, chances are that your life expectancy could be even higher. This is good news of course, but it brings with it important expat wealth management and retirement planning implications.

Perhaps chief among these is the need to ensure that your retirement assets are sufficiently valuable to last you through a long and healthy old age, and this means making sure you factor in the likelihood of inflation eroding the purchasing power of your assets over time.

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