James Andrews’ Post

It's been feast or famine when it comes to reporting on interest rates for what feels like the past 20 years. Interest rates crashed from 5.25% to just 0.5% between March 2008 and March 2009. The economy was in turmoil and the Bank of England was desperately trying to bail out the ship, slashing rates by as much as 150 basis points a month. We all thought it was a short-term measure. Then, after a mere 15 years where rates didn't move by more than 0.25 percentage points up or down for entire years, rates rocketed from 0.1% back up to 5.25% in 14 meetings. Fast forward to spring 2024 and people have been predicting that rates are about to tumble back down again to "sustainable" levels since Christmas. They say history doesn’t repeat itself, but it does echo. The main question seems to be whether the echo that’s heard now will be of the expectation of rapid change to never arrive, because what everyone thought of as 'normal' has - in fact - fundamentally changed, or that the Bank has waited too long and a rate-slashing frenzy is on the way.