Liquidity at a premium

Past performance is no guide to the future for economists as the task of forecasting interest rates turns from Greenspan-watching into the complex task of comprehending the correlation between a wide array of variables. Here, three economists tell Mortgage Risk what is likely to happen next. Peter Charles, chief economist at Bradford & Bingley, based in London

Not so long ago, one of the more simple tasks of an economist's life was forecasting what would happen to interest rates. Just make a prediction that rates wouldn't change and you would almost certainly be right.

From August 2004 to July 2006, the Bank of England's Monetary Policy Committee (MPC) changed the base rate just once, when in August 2005 they reduced it from 4.75% to 4.50%.

And to make life really easy, one only had to forecast the movement in the base rate because the other key market