Interest rates ‘to stay low’

UK interest rates should stay low, as raising them could risk a double dip recession, it has been argued.

Bank of England Monetary Policy Committee member Andrew Sentance recently suggested that the base rate may have to rise soon to combat inflation but Gary Styles, the strategy, risk and economics director at housing intelligence service Hometrack disagreed.

He said that the economy is “fragile” and that there is a “risk” that “if you put up interest rates and tighten fiscal policy quite sharply later on this year, it will generate this double dip that everyone wants to avoid”.

Mr Styles also noted that the economy has yet to feel the effects of a squeeze on public spending that is expected to take place after the general election.

Continued low interest rates could be good news for those looking for cheaper personal loans, by helping to keep the cost of these down.

The most recent statistics for gross domestic product revealed a contraction of 0.2 per cent in the third quarter of 2009, with data for the last three months of the year still awaited.

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