The interest rate hike by the BOE last month has accelerated the interest rate trend, pushing the 3month rate to over 4.95% ! The trend is likely to continue upwards into the next interest rate rise, probably in October or November 2006, though unlikely to occur in December due to the holiday period.

Previous analysis stands that suggests money market rates (3month) will rise to a range of 5.50% to 5.75% by sometime early next year. (Base rate target range is 5.25% to 5.50%)

Disclaimer - This Forecast / Trade Scenerio is provided for general information purposes only, and not intended as solicitation or recommendation to enter into any form of market position. You are reminded to always seek independent professional advice before entering into any investments or trading positions.

Comments

Kosmas Njanike
19 Jul 08, 08:06

Interest Rates Hike Solution

I think to cushion borrowers badly affected by the sudden increase in interest rates the concept of Islamic Finance can be of help. That is no interest rates charged on loans but would rely on profit sharing instead. Whether permanent or temporary i see some attractive features in that type of banking. If some features of Islamic finance are implemented in conventional(western) banking it will go far in saving jobs worlwide as firms keep on producing and will not slow or scale down operations because of punitive interest rates.

Food for thought.

Kosmas Njanike

Bindura University

Zimbabwe

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