Woodford: Idea of UK interest rate rises is laughable

Neil WoodfordFund manager Neil Woodford says the idea that the UK is ready to raise interest rates is “laughable” as he predicts more extraordinary monetary policy across the globe.

Woodford says the UK is “nowhere near” being in a position to increase interest rates.

“It is laughable, the notion of higher interest rates in the UK frankly makes me laugh,” he says. “We are nowhere near an interest rate increase in the UK, that is just not going to happen.”

“It is extremely unlikely we would see higher interest rates because the threats to the world economy are not rising inflation and growth acceleration, they are growth deceleration and deflation, these are the challenges the world faces going forward.”

“I’ve been much more cautious in the UK and US, particularly with regard to the US and said if interest rates did go up in the US in 2015 soon after that we would appreciate that was a policy error and I think that is becoming increasingly clear,” he adds.

The world will still see global growth, but it will be slower than many expect, Woodford adds.

“The global economy will grow but it will not grow very quickly and the deflationary challenges we face are persistent and growing.

“So must stand by for more extraordinary monetary policy, with more economies setting negative interest rates and more bond markets yielding negative rates out to 10 years and beyond. That is the future we are likely to see in government bond markets,” he adds.