Tight labour market may push interest rates higher

Fixed interest fund managers are keen on short-duration gilts in the belief that UK interest rates are nearing their peak. Long duration gilts are less in favour with Royal & SunAlliance Investments on the back of concern that demand for these assets may fall as a result of an expected change in regulations which would allow pension funds to use corporate bonds to meet the Minimum Funding Requirement (MFR). Dave Hooker, investment manager, fixed interest at Royal & SunAlliance Investments, believes there will be a further rise in interest rates which he expects to peak at 6.5%. UK interes...