The Bank of England could keep interest rates at 0.5% for another three years, a leading UK economic consultancy has claimed.
The ominous prediction is bad news for savers, who will continue to see a low level of return on their savings. If you are trying to save money for the future, compare savings accounts with Money Expert.
The Bank of England announced its decision on UK interest rates yesterday, once again maintaining the record-low rates.
The decision marked the third anniversary of the Bank of Englandís decision to reduce rates to their lowest level in their 318-year history.
Analysis by Capital Economics has found that the rate could remain at the all-time low until 2015, as the UK continues to struggle in a bleak economic climate.
ìWe think that they could stay there for another three years. And, while the consensus now thinks the Monetary Policy Committee is unlikely to extend its asset purchases any further, we still expect even more QE later this year,î said Vicky Redwood, the consultancy’s chief UK economist.
ìRemember that when interest rates hit their previous record low of 2% in 1932, they stayed there for pretty much two decades.î
The low interest rates have taken £76 billion from savers in the past three years, compared to the higher rates they received in the previous three years.
Other industry experts are also predicting a continued low level of interest rates, as the UKís economic recovery remains slow.
ìThe committee voted to hold rates at 0.5% for the 36th consecutive month in March, and there is little to suggest it will want to raise rates for a long time yet,î said Fionnuala Earley, UK consumer economist at RBS.
ìInflation is beginning to recede and economic conditions are weak, in spite of support from quantitative easing. So the MPC has no reason to rush, especially if it fears a hasty rise could squash any budding recovery.î
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