When Will Interest Rates Come Down?
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- Опубліковано 20 тра 2024
- Whether you’re a saver or a borrower a question that many people are asking is: When will interest rates come down? In this video, we’ll look at the latest forecasts for UK and US interest rates to see the near-term outlook, but also consider the longer-term drivers of interest rates to help you gauge where rates will be over the years ahead.
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Timestamps
00:00 Introduction
00:32 Interest Rate Forecasts
04:20 Bond Supply & Demand
07:10 Downward Rate Drivers
10:25 Upward Drivers: Quantitative Tightening
12:00 Upward Drivers: Shrinking Labour Force
12:51 Upward Drivers: Deglobalization
14:30 Upward Drivers: More Government Spending
16:42 Conclusion
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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.
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Got mine this morning. Thanks Ramin.
Do you publish your pies? If so, how can we find them?
Here they are:
AssetMix 20 www.trading212.com/pies/l7rG716ZJqLWY5phzozz3L9WmJyQ
AssetMix 40 www.trading212.com/pies/l7rG716ZJqLWY5phzozz3La22agv
AssetMix 60 www.trading212.com/pies/l7rG716ZJqLWY5phzozz3LeBTjjT
AssetMix 80 www.trading212.com/pies/l7rG716ZJqLWY5phzozz3LeGrZwQ
AssetMix 100 www.trading212.com/pies/l7rG716ZJqLWY5phzozz3stZbScr
@@Pensioncraft Utilised this to rebalance my pension portfolio which was my intention for 2024.
Hi Ramin, beautiful video as usual! I was wondering if you are familiar with the Steuerpflichtige Vorabpauschale tax in Germany. Essentially, the government started taxing unrealized capital gains from ETF. Allegedly, this is to fund people's pensions and probably to provide generous salaries for government politicians.
Interest rates go down when the government thinks the economy is in trouble. The economy is in deep trouble, especially with massive government debt. But lowering interest rates = inflation, where everyone is hurt, rich and poor. Inflation is not going down. So, I do not see them lowering rates.... and they will continue to print money to pay for interest.
It's a joy to listen to your detailed analysis every week.
Thanks @avibm948
Opinions on the market diverge; some claim overvaluation due to rapid gains, while others cite strong economic fundamentals justifying high valuations. Raises concern for my $600K equities going 8% up and 20% down. Should i hold on or sell off my positions and hold cash?.
Informative video, thank you!
Shiller p/e Ratio..... Hi could you please do a video on this subject. Im looking to invest and im unsure if I should drip feed or lump sum and have seen this could help but I think I would understand it better if you explained it 😊
Hi Ramin! Do you think higher rates for longer will keep stock market gains minimal? Or do you think both might rates and stocks will stay high in the coming years?
I was wondering if the "shock" (not really, it was easy to see in the shop's footfall) 3.2% fall in UK retail sales in December will filter through to increase the pace of rate cuts. I've seen articles stating that if January figures go the same way we will technically be in recession.
And rates will rise, not fall, as companies produce less?
Most recent trend in UK is GDP flat and I don't see any imminent reason that will change at all soon.
Defense spending on various wars?
Thank you for another clear and informative video - very interesting
My pleasure! @chipledhungaman
Our relatively small economy and therefore central bank will have no say on what ultimately happens to interest rates, the global trend presently is one of deflation and therefore lower rates
Thanks, Ramin. Excellent video as usual
Glad you enjoyed it @blhlow4904
...and as always, thank you for creating.
Thanks for listening @minshum
I doubt interest rates will ever drop to pre covid levels in my life time (assuming i have about 20-30 years left in me(.
Thanks Ramin for a great video as always.
Glad you enjoyed it @MarkCW
Great video quality improvement 👏
Thanks 😁 @NightElff88
So Ramin basically if I have understood this correctly don't buy bonds [especially govt] at the moment but wait for a couple of years when the need for infrastructure funding 'kicks in', AND wait a year or so before doing a long-term mortgage fix for the same reasons?
Thanks!
@jeffkojac4121 Thank you!
very comprehensive explanation.
Glad you think so! @RafaelTovar90
As always, another informative, intelligent fact based video. I thoroughly enjoyed it - thank you.
Glad it was helpful! @EdfromCanada
Another great video...I am not a fan of bonds....I find the way you give everyone the information that is needed to make informed decisions is fantastic...thanks Ramin
I appreciate that! @ATOMIKDOG23
Hi Romin. Is there any point investing in a money market fund on a platform that charges a fee when trading 212 are offering a 5% interest rate by investing your cash in a MMF? Is trading 212 now the cheapest way to invest in a MMF?
Exactly what I am thinking! It seems it is better to keep the cash with T212 until the rates start to fall.
Thanks Ramin for the interest rate update
I’m now due to remortgage in April
The rate for TSB 5 year term is 4.39%
And this is what I’m going to go for now
Great video thanks again
Don't go for a 5 year fix. Go for a 2 year or a variable. Mortgage rates are going to fall steadily for the next few years. Fixing for 5 years is really ill-advised.
I fixed for 5 years in Jan 2022 at 1.49%. You're fixing at basically the peak of this recent rise. You're locking in a bad rate.
@@Wellspicedchaffinch Depending on the debt, fixing for 2 years at a higher rate may actually be more costly if the rate in 2 years doesn't drop enough in comparison.
To make 2 year fix work, you're banking on interest rates dropping by atleast 1.5% in 2 years, which isn't certain.
@@ronniefront511 yes and this is what I’m worried that the rate may not drop that fast
I still have 3months things may change and I’ll be reviewing everything before signing documents
As a saver, it’s been great to lock in some of these higher rates, although the banks have already priced in rate cuts in their new offerings.
wtf r u talking about
Yet the stock markets returned way more in 2023 than any saving account which actually went down in real terms due to inflation
@@RobertGillontheinterweb Depends if you sold equities end of 2021 or not. Otherwise, it just returned back to the original value if you were a buy and holder!
Great video as usual, but how do we see your pie on T212? *Edit - never mind, found them!*
Thanks @mccready7479
That chart of life expectancy vs healthcare spending at 15:50 - there are two ways to describe this. One say is to say higher life expectancy is expensive. The other is to say spending more on healthcare enables people to live longer. The general trend on the chart is clear, except for that one crazy outlier country in pink right at the top which is... the USA.
Awesome video
Glad you enjoyed it @andrewmelean8259
Adding to the conundrum is the Fed's runoff of over a trillion of treasury bonds through QE, a reserve drain that historically has meant higher yields and lower equities. If the market is wrong here, it means a strategy of rolling t-bills will earn the best returns.
Huge respect for you and what you teach us daily. Your videos have helped me grow tremendously and also special thanks to Chris Haun he has been of tremendous help to me through my journey too.
I recently made further purchases. Saving for a market slump is also a bad idea. There are different perspectives on recessions and depressions; we cannot always expect significant rewards; and taking risks is preferable to doing nothing. The bottom line is that by diversifying your portfolio and making sensible judgments, you will accomplish exceptional outcomes. In just 5 months, my portfolio's raw earnings increased by $608k.
Despite my conviction in your direction, my recent stock purchases, and the fact that I am an AMC shareholder, I have not been able to amass anything. I had been in debt for far too long before the collapse. What are the steps required in investing?
Excellent video. I think I’ll come out of bonds soon.
Thanks @3rdrift
The long run average is 2.5%???
I don’t think so
The earliest the MPC will reduce rates is probably October 2024
0:36 the forecasts on the way up were completely wrong, revised every quarter from an initial max 2.5% up to 5.5% over a period of a little more than 12 months prior to the recent rate rises. They have NO CLUE
Chakwal nsb pensioner rate fix at 1380 but why so low
I am a Landlord and i have just been offered a 4.89% for five years I am happy with anything under 5 % the lower the better but 5% works for me in the NE of england where my yeilds are over 10%
I need interest rates to come down a LOT in the next 5 years in order to maximize my lump sum pension.
You never know all we can do is just guessing.
My personal Feeling is, that they have to cut the rest even below 2.5%. I even think they will be again at around 1%.
The inflation rate was low from.
2013 to 2019 even with these zero interest rates. The inflation came up with and after Covid and Ukraine war. Also Bidens moneyprinting programs are a huge factor.
Given the latest figures, I'm not holding my breath.
Is it the same Fed committee which wasn't even thinking about thinking about raising rates? I would take their point of view with a bucket load of salt.
In the context of the United Kingdom, the Bank of England's Monetary Policy Committee, as per the minutes from the December 2021 meeting, concluded that inflation exhibited transitory characteristics, and they envisioned the persistence of historically low interest rates for an indeterminate duration. It is worth noting that observers often remark on the tendency of central bankers to employ intricate and potentially ambiguous language, with outcomes frequently diverging from their stated expectations, with central bankers usually the opposite of the rhetoric materialises 😂
👍
Cant wait for them to start the money printers again
Economic investigator Frank G Melbourne Australia is still watching this very informative content cheers Frank 😊
Is this valid even if labour win a landslide victory?
BoE is independent and its task is managing inflation. So don’t see why interest rates would change.
I don’t think interest rates will drop to pre Covid levels for a very long time
And it shouldn’t. Those rate were an extreme anomaly for which we are now paying with inflation.
They won't ever. The historic range for the Bank of England rates is 3-5pc if you exclude the last 16 years and the inflationary 1970s/80s.
Suppose everyone that knew would have got long term mortgages 10 year+
@@makaveliangel87Never been available in the UK.
The UK government faces the imperative of refinancing a huge proportion of its national debt within the next two years. With debt servicing costs exceeding 5%, sustaining such rates is deemed financially unsustainable. The prospect of merely servicing this debt, let alone managing higher rates are unpalatable, they will need more QE to pay the debt interest. I see a pivot, and a return to historically low rates.
This is the monetarists view of course. In reality Bank Credit tightening will mean higher interest rates for longer, exacerbated by recessionary forces? What transpired in the 70s - inflation dropped after the initial surge but rose strongly thereafter for a number of years.
True there was a double peak in inflation i.e. after the 1974-1975 peak (primarily caused by the 1973 oil crisis) and visible here fred.stlouisfed.org/graph/?g=1ewha came the 1979-1981 peak again linked to oil. In fact, if you overlay the annual change in the price of oil with inflation you can see the strong relationship fred.stlouisfed.org/graph/?g=1ewid So money supply matters but oil matters a lot more, hence the strategy of securing a domestic supply and the strategic reserve which has proved a very smart decision. Thanks, Ramin.
@@PensioncraftInflation lags Prices (Gibson's Paradox, 19th century - ignored by Keynes who didn't understand it- and recently proven empirically by Werner).
Oil prices will rise for several reasons - and it's at the top of Exstrom's Pyramid. Inflation will rise IMO (in fact it is already?).
I hope interest rates stay at 5 to 6 percent for the next 5 to 10 years banks will see an increase of investors seeking Jumbo CDs and money market accounts plus other national interest rate base financial products
We have to accept that 5% is normal rates . Ultra low rates days are over and won’t return for this generation
Bonds just feel like the biggest con in the world. Interest go up by 1%, oh have I lost 1%? No, your fund held lots of 10 year bonds, so you lost 15%.....
Interest rates go down, I hold long range bonds, did I make 15%? No, the government printed more of them and fewer people bought them so prices went down....
Just can't win 😂
The pound is overvalued and interest rates are high to defend it.
The solution is to have a competent government and not leave the EU.
Ooops!
How does membership of the EU affect the possibility of a competent UK government ?
@@timg1246The UK economy would have not become so fragile, but to be fair where ideology leads, suffering tends to follow. And our current government is in denial about their beliefs not according with economic realities. Brexit was to protect the UK's Offshore Tax Haven Business, and the price paid for that is not worth it, as its left the UK more exposed to downturns. Competent government right now is an oxymoron.
@@BigHenForReally.
So, was Brexit responsible for Germany's 'fragility' that led to their current recession ?
German reliance on Russian gas screwed them. @@timg1246
Maybe 2025
The prevailing narrative suggests that the actions taken by central banks were driven by an overly pessimistic outlook, assuming enduring disruptions to supply chains, the perpetual scarcity of semiconductors, and an unceasing surge in raw material costs. It is imperative to acknowledge that external factors, such as the European Union's decision to terminate long-term energy contracts with Russia in solidarity with Ukraine, significantly contributed to the surge in energy costs. The resultant reliance on the wholesale spot market further exacerbated the inflationary pressures. It is worth noting that some observers attribute this escalation in energy costs to what policymakers refer to as the repercussions of Putin's actions invading Ukraine. It is not, its idiotic
bureaucrats in government. Sanctions also wemt well didnt they 😂
Commission free...I know you are obligated to say it, and it can't be easy.
💎💎
Financial repression is happening/ will continue to happen. And that’s the future. This will also lead to social unrest. Be prepared.
"where we might be headed" is such an annoying Americanism.. in the present tense, it's "HEADING".. ffs Ramin you should know this.
When the socialists leave office
We don't have any socialists in office.
Hi Ramin when are you going to have a UA-cam video together with @benfelixcsi 😊🙏