60 seconds with Marcus Brookes on the outlook for interest rates in 2015

Marcus Brookes, Head of Multi-Manager, explains why interest rates rises in the US and the UK will likely be delayed in 2015, and what impact that will have for mortgage holders.


A change in the outlook for interest rates

When looking at interest rates for the rest of 2015 there has been a change in mind-set over the last three to four weeks.

Coming into this year we knew that the US had grown very well – at about to 2.4% over the course of 2014 - that led us to expect that interest rates would be rising sometime around June 2015.

But there has been unemployment data coming out in the US, which while it is still pretty good is not falling quite as fast as it was.

That has led people to reassess their expectations for a June rate rise and maybe think about a rise in September or even December this year.

What does that mean for UK interest rates?

The Bank of England (BoE) was thought to be considering a rate rise just after the Federal Reserve (Fed). So, if June was the likely month then maybe the BoE would raise rates in August.

With this now slipping to September and maybe even December for the Fed the BoE may wait even longer. It may wait until late 2015 or even into 2016.

Mortgages are probably going to go up, which was our expectation anyway. However, maybe they might go up a bit later than we all expected.

Important information

This communication is marketing material. The views and opinions contained herein are those of the named author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy.

The data has been sourced by Schroders and should be independently verified before further publication or use. No responsibility can be accepted for error of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

Past Performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.  Exchange rate changes may cause the value of any overseas investments to rise or fall.

Any sectors, securities, regions or countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.

The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. Forecasts and assumptions may be affected by external economic or other factors.

Issued by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority.