Interest rates have continued to remain high as a result of swelling levels of inflation. However, with inflation seemingly having reached its peak, some are hopeful interest rates will begin to decrease.
A decision on the matter will be announced next week by the central bank’s Monetary Policy Committee (MPC), which has previously been somewhat split on the best approach to take.
Laith Khalaf, head of investment analysis at AJ Bell, looked into whether the interest rate is likely to increase in the coming week.
He explained circumstances such as falling gas prices might make the central bank less inclined to push rates up “too much”.
Mr Khalaf added: “Markets are currently expecting interest rates to peak at 4.5 percent in 2023, which looks a reasonable estimate as things stand at the moment.
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This is particularly the case for those who have purchased an annuity, offering guaranteed income for life, or for a set period of time.
She explained: “Annuity rates have fallen back since the dizzy heights reached in the aftermath of the mini-budget but still remain almost 40 percent higher than the same point last year.
“Currently, data from our annuity comparison tool shows a 65-year-old with a £100,000 pension could get an income of up to £6,892 per year.
“This compares to £5,003 at the same point last year.
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“Annuity incomes are determined by the yields on long-term gilts and interest rates have an effect.
“We cannot guarantee an interest rate increase will further boost incomes in the coming weeks, but it is a real possibility.”
With annuity rates high at present, it may be beneficial for Britons to start shopping around.
Ms Morrissey suggests online research could help older people see what kind of options are available, and the rates currently on offer.
People could even benefit from higher annuities in circumstances they may not expect.
For example, those with an existing health condition could “get more”, Ms Morrissey said, and so this is worth investigating.
She added: “It is vital to get a comparison from across the market to make sure you get the best deal.”
Inflation remains at five times more than the Bank of England’s target of two percent.
As a result, some economists have predicted a base rate rise of between 0.25 and 0.5 percent next week.
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