Interest rates tipped to stay low

UK interest rates have been tipped to stay at their current record low level until 2010.

The prediction came from UK economist at BNP Paribas Alan Clarke, following the decision last week by the Monetary Policy Committee (MPC) to hold the rate once more.

He stated: “The fact that they [the MPC] are doing quantitative easing is because they can’t cut interest rates.”

Mr Clarke added that there is likely to be a six month hiatus between the end of asset purchases and any rate rise, while at the same time he suggested growth will be weak in 2011, something that could mitigate against many rises that year.

Such a scenario could mean that those seeking mortgages will find that the cost of these does not rise in the next few months.

A different view was suggested by MPC member Andrew Sentance, who told the Guardian that rising inflation may make a change in monetary policy necessary at some point this year.

Leave a Reply

Your email address will not be published. Required fields are marked *