The UK was potentially likely to see interest rate cuts a little quicker than the US, according to Lindsay James, investment strategist at Quilter.
This is because the “interest rate transmission” from the central bank to consumers is arguably more potent in the UK, due to the fact fixed-term mortgages are far shorter than in the US.
James said: “The UK economy is going to be hard-pressed to grow in 2024 as a further tranche of home loans come up for renewal, pushing up average monthly payments by hundreds of pounds.
“The Bank of England will be under increasing pressure in 2024, an election year, to respond to the weakening economy.”
Other experts have encouraged investors to forget about the outlook for rates and to take advantage of the high yields on offer at the moment. The US 10-year Treasury yields nearly 5 per cent and the 10-year gilt pays about 4.5 per cent.
“I look at the bond markets and don’t worry too much about the wider issues — just at what the potential returns might be,” said Ben Yearsley, investment director at Shore Financial Planning.
“And I think the returns you get from bonds look enticing today. You can get more than 6 per cent from high quality bonds, what’s not to like about that?”
Imogen Tew is a freelance financial journalist
