Interest rates 'might not rise'

08/10/2009

The Bank of England is set to keep its lending rate at an all-time low, an expert has stated.

Fallout from the credit crunch and recession means that the Bank of England will keep interest rates at 0.5 per cent for the whole of next year.

This is the view of Benjamin Williamson, an economist at the Centre for Economic and Business Research (CEBR) who gave new analysis today (October 8th).

According to the financial expert, the Bank of England will make the move due to lower government spending and a "weak" UK recovery from the recession.

Lower interest rates from the Bank of England have the effect of providing cheap credit to the nation's commercial banks.

This can in turn lead to lower mortgage and loan rates for consumers - meaning that interest rates are often reduced in times of recession.

Mr Williamson said: "We don't see base rates lifting from 0.5 [per cent] in 2010; partly to counteract the expected sharp fiscal contraction, but also because [if] the recovery does remain weak … they have got to keep borrowing costs down."

The Bank of England itself announced today that it would be maintaining rates at their present level until November.

Tags; Current UK Economy, Young Family Finances, Retirement Money Problems, Credit Card Lifestyle, Recent Graduate Debt,

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