Interest rates may not be coming down soon
Many businesses are waiting patiently for cheaper borrowing. However, that wait could prove costly. Interest rates may not be coming down soon, so plans built on that assumption deserve a fresh look.
What the Bank of England decided
The Bank of England held Bank Rate at 3.75% in September. Yet the decision was far from unanimous. Three members of the Monetary Policy Committee voted for an immediate rise to 4%. That split matters, because it signals genuine unease.
Inflation sits at the heart of that unease. UK inflation has climbed above the Bank’s 2% target. Meanwhile, higher energy costs continue to add pressure. If those costs feed through into wages and prices, rates may stay higher for longer.
Plan for more than one outcome
Try not to predict the Bank’s next move. Instead, test whether your plans work under several scenarios. Before taking on new finance, prepare three forecasts:
- Rates remain broadly unchanged.
- Rates rise modestly from here.
- Rates eventually fall back.
This exercise can change a decision entirely. A project may look affordable only if borrowing costs drop. In that case, headroom disappears quickly when rates hold steady. Conversely, an investment that still delivers an acceptable return at higher rates deserves serious consideration. After all, waiting indefinitely for cheap money carries its own cost.
Review what you already owe
Existing borrowing needs attention too. Fixed-rate loans approaching renewal are especially important. Therefore, find out now what refinancing might cost you. Variable-rate facilities and overdrafts also need regular monitoring. Otherwise, rising finance costs will quietly erode profit and cash flow.
Stress-test your plans
The practical message is straightforward. Do not build decisions on hope. Instead, stress-test every borrowing and investment plan properly. Knowing what happens if money stays expensive gives you a far stronger footing.
Talk to us
Since interest rates may not be coming down soon, now is the moment to act. Contact our team today. We will help you model the scenarios, review your borrowing and make confident decisions.
