How good is /r/ukpersonalfinance at predicting interest rates: a retrospective

[nick5555]

@gdoll18 I’m pretty sure those are not the BoE’s own predictions, they are market derived - eg they look at swap rates (and possibly other things - bond prices?) and translate that to what the wider financial markets are saying Bank Rate is. They aren’t necessarily saying ‘we think interest rates will be xyz’.

 

[resjudicata]

@christian2018 To be honest, I think most people mimic what news they want to personally hear. I want the interest rates to stay high so I’m fairly optimistic they will. People that have mortgages/ loans up for renewal are often playing down rate rises with doses of coppium to reflect their own situation.

 

[johnnybegood55]

@resjudicata I’m actually high on copium now, and will be for the next 9 months.

 

[sashieng]

@christian2018 In our defence .... The actual rate changes are based the actual facts of the matter which are continually reviewed and updated, and even the MPC, who have access to million pound modelling software were wrong, so that makes me feel better

 

[mbrownlrhg]

@christian2018 I agree a lot of people here especially got it wildly wrong, and were very overconfident. I remember I asked advise about taking out a loan in 2021 because I knew the rates would rise therefore substantially Id cash in on the increase in savings rates stress free and I was shot down , good thing I didn’t take their advice as I’ve got a large loan at 2% and it’s in a fixed rate account paying nearly 6%

 

[calso]

@christian2018 There are only handful of people who knows what will the intrest rate will be and they reside on the BOE board.

Predicting tragic world events are for gamblers and liars.

 

[topolski18]

@calso If only they knew! Not sure anyone could have predicted the Truss Fiscal Event, for example.

 

[john]

@topolski18 Yeah they only know for certain the next month what they set it at, but they don't know the next year, well they have an idea like we do, but with a bit more accuracy (you would hope!)

 

[uriel_1]

@christian2018 /@uriel_1?

Fuck that guy, what a nerd

My only prediction was Andrew Bailey sucks and so does the MPC

Now do the other UKPF cycles: p2p lending, crypto, options, swapping bank accounts for sign ups

 

[christian2018]

@uriel_1

 

[resjudicata]

@uriel_1 Also do global Vs. S&P500 indices, a lot of posters in here confidently advise global over the S&P500

 

[julia736]

@christian2018 Clearly I don't understand the language being used here, because I don't understand how this translates to 0.1%:

Markets currently are pricing a terminal BBR rate of 5% by mid 2023 (so volatile at the moment so this does move). It is hard to predict the future but people who are in the industry don't see a world we aren't at 4% by early 2023.

 

[thomasroane]

@christian2018 !thanks (does that work as a first comment rather than a reply?) That's good to know how little some of the people commenting on here actually know/are able to predict

 

[christian2018]

@thomasroane Thanks! To be fair, most people simply know it’s too hard to predict. It wasn’t easy finding people that were willing to predict. This wasn’t really a fair assessment of the strength of knowledge in the community per se

 

[musicwidow]

@thomasroane

!thanks (does that work as a first comment rather than a reply?)

Neither. It won't work at all for you. Only the main OP of the whole post can used !thanks to provide thanks to comments.

 

[triangulumvivid]

@christian2018 The UK was what, 6 months behind raising rates compared to the US FED despite worse inflation numbers? I guess knowing that, it seemed pretty clear to me that interest rates were going to need to go up across the board in almost all western nations?

 

[christian2018]

@triangulumvivid A lot of people agreed with your thinking, but most seemed to underestimate how high it would go

 

[diannalynn67]

@christian2018 Your methodology for collating predictions seems fairly crap tbh, which undermines the whole exercise

 

[resjudicata]

@diannalynn67 What methodology do you think should have been followed?

 

[prettygeek]

@christian2018 I realise you say that you look for personal predictions, but personal predictions are still often informed by what the market thinks. I don't have a perfect memory, but I imagine if you looked back at Sonia swap rates at those times (which you could use to estimate the base rate), you'd be seeing similarly low rates/predictions.

I think your theory that: "people said rates would be lower because they're used to it" is unlikely to be true. I think that people thought this because that's what everyone in the market was betting their money on... The "wisdom" of the crowd.