Inflation roaring back, will interest rates follow?

Those of us with a few years under our belt will remember the seventies. I've been a reader of this site for many many years and we've had occasional inflation scares over the last 25 years, but this time i think it may be for real. The US reported a headline rate of 6.2% this afternoon and where they go we tend to follow. Definitely a bad thing for current holders of fixed interest bonds if interest rates start to rise. On the down side existing bond holders will feel the pain, on the upside maybe higher borrowing costs will push corporates to issue more retail offerings?

Any thoughts?

Comments

  • Inflation is crazy regardless of the figures the government issue. Look at house prices and energy 15%+. The bank of England have so far failed to grasp the nettle and the government poured petrol on the smouldering house prices with their stamp duty fiasco.
    Intrest rate increases will have to to follow but they will be pretty small to attempt to keep the economy going. I think we will see a lot clearer picture come late Spring/ Summer 2022. It will not deter me from continuing to purchase Fixed income but trying to be patient and buying on any dips. Remember the late 70s and 80s well and having to pay 14% intrest on a buy to let !!!
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