(N)ever-increasing rates

Here is a chart, part nicked from the OBR’s latest Forecast Evaluation Report and part updated with the latest market projections. Very simply, it shows you how markets’ expectations for interest rates have changed rather radically over the past few years.

So, for instance, had investors been right about rates back in March 2011, then at this very moment interest rates would have been up at 3.7%(!) As it is, currently markets don’t expect the first increase in borrowing costs until next October (which, by the way, is about six months later than they were thinking only last week). Ah well, when will those markets learn…?