GBP interest rates are expected to reach over 5% in 2023, here are 5 questions to ask before you enter in to an interest rate hedge 🎯

**1. Risk**

What is the underlying risk? Is there any natural hedge in your portfolio or project?

**2. Product: **

****What is the best derivative to hedge your financial risk in a rising interest rate environment? Should you hedge with a combination of instruments instead of just one?

**3. Tenor**:

Given the inverted curve (long term rates lower than short term rates), can you delay the start date of your hedging, decreasing your long term interest cost? Or perhaps consider a longer tenor?

**4. Quantification:**

To what extend do you want to mitigate your risk? Are you maximising your return and minimising risk?

**5. Downside protection:**

If you do take some risk in your hedging strategy, will there be a cash impact if things go south and the central bank raises rates faster than expected to tame inflation? What is the impact of such an event / trigger?