databank
interest rates
Interest rates market outlook from
THE BANK OF ENGLAND continues to base its monetary policy decisions against a backdrop of rising inflation and a fledgling recovery in the UK economy. Although we have seen an acceleration of inflation in the first part of the year underlying price rises relate largely to non-recurring items, primarily the increase in VAT and uplift in energy prices. Despite an exit from recession in
the final quarter 2009, the medium- term outlook for inflation remains subdued as there is still significant slack in the UK economy. Recent industrial production and trade data has shown unemployment at a 13-year high and signs that the export
Asset managers could benefit from moving some of their portfolio to longer-term products
sector may not be fully capitalising on the upturn in global trade. Inflation is expected to fall below the target 2% later in the year. For the pound, it may yet fall further, especially with increased uncertainty about the outcome of the general election. Financial markets expect
official interest rates to eventually start rising in the latter part of 2010. However, as inflation may well fall more quickly than markets expect and then track below target for a sustained period, interest rates may be held at the current historic low for longer in order to support growth. When interest rates do start to rise, we expect them to do so only gradually. Our central forecast is for
Current fixed rates offer value, especially if down- side economic risks prevail in the coming years
three-month interbank rates to rise gradually from about 0.65% to 1.1% in a year’s time, 2.2% in two year’s time and 4.4% five years from now. Based purely on our projection of three-month libor, asset managers should expect an average floating rate of about 1.7% in the next three years and 2.6% in the next five years. Comparing this with current fixed
rates, we see that swap rates have fallen since the start of the year on concerns relating to the strength and sustainability of the global economic recovery. However, the current 3-year and 5-year swap rates of around 2.2% and 3%, respectively, remain above our expectations for average floating rates over the relevant time period. This suggests potential advantages to receiving fixed rates or varying floating and fixed exposures over time. All this suggests potential advantages for asset managers in moving at least some of their portfolio from instant access and short-term vanilla fixed products towards longer-term products. ■
Ian Buss is head of not-for-profit, Lloyds TSB
THE RATES BELOW are the highest published and can be used to negotiate with other banks which may match or better them if asked. Please note that the creditworthiness of an institution is of critical importance and that credit rating is just one of a number of factors to take into consideration.
Best rates at 10.03.10
No notice accounts £1
Standard Life Bath BS
Account
shown gross ▼
Market Harborough BS Charities
Stafford Railway BS Corporate Pullman Standard Life
Direct Access
No notice accounts £50k
Monmouthshire BS Marsden BS Beverley BS Standard Life Ipswich BS
Notice accounts £1
Bank of Cyprus UK Standard Life Standard Life Bath BS
Standard Life
Notice/ Deposit Term
Gross
Premium Direct Access None £1 Business Direct
None £1 None £1 None £1 None £1
Int Paid
▼ ▼ ▼
1.37 Yly 1.15 Yly 1.05 Yly 1.00 Yly 0.80 Yly
Charities & Clubs Direct None £5,000 1.75 Yly Business Deposit Postal Business
35 Day Notice
Business Direct 30 10 Day Notice
Premium 10 Day Notice 10 Day £1 60 Day Notice
All rates and terms subject to change without notice and should be checked before finalising any arrangement. No
liability can be accepted for any direct or consequential
54
Charity Finance April 2009
35 Day £1 60 Day £1
30 Day £1 10 Day £1
None £25,000 1.75 Yly None £50,000 1.75 Yly
Premium Direct Access None £50,000 1.62 Yly Corporate/Client Deposit None £25,000 1.53 Yly
1.75 Mly 1.65 Yly 1.58 Yly 1.30 Yly 1.08 Yly
Notice accounts £50k
United Trust Bank Secure Trust Bank Monmouthshire BS Investec Bank plc United Trust Bank
Cheque accounts
Clydesdale Bank
Investec Bank plc
Fixed rate accounts
United Trust Bank Julian Hodge Bank Julian Hodge Bank Julian Hodge Bank
▼
60 Day Account Account
Notice/ Deposit Term
Gross Int Paid
▼ ▼ ▼
60 Day £5,000 2.60 Yly
60 Day Notice Issue 2 60 Day £10,000 2.52 Qly Charities & Clubs Dir 30 30 Day £5,000 2.25 Yly Business High 5 6 Month Notice
3 Month £50,000 2.19 Yly 6 Month £5,000 2.15 Yly
Whiteaway Laidlaw Bank High Interest Business Leeds BS
Bus Choice - Charities Charityline Cheque
The Co-operative Bank Community Direct Plus Fixed Deposit
None None None
Pension & Trust Cheque None None
£1
£5,000 0.50 Mly £100
0.85 Mly 0.30 Yly
£10,000 0.25 Mly £2,000 0.12 Mly
5 Year £500 4.75 Yly
Capital Millennium Bond 5 Year £50,000 4.40 Yly Capital Millennium Bond 4 Year £50,000 4.15 Yly Capital Millennium Bond 3 Year £50,000 3.90 Yly
loss arising from the use of, or reliance upon,
this information. Readers who are not financial professionals should seek expert advice.
Weatherbys Bank Ltd 2 Year Bond Issue 15 2 Year £50,000 3.75 OM
Account information supplied by
www.civilsociety.co.uk
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