Interest rates will not increase substantially over the next few months, according to an investment firm.
Threadneedle predicted that rates will remain low in the long term and stated that it is deflation which poses a real threat to the economy, not inflation.
“Interest rates will remain low for a considerable period and quantitative easing will be required [for] some time to come,” the company stated.
The Bank of England’s Monetary Policy Committee reduced the UK’s base interest rate to 0.5 per cent on March 5th and has voted ‘no change’ for the past two months, a decision that may have benefited homeowner
It moved to slash the rate dramatically in the months following the start of the global financial crisis, with the historic low comparing to the 5.5 per cent figure observed in January 2008.
Threadneedle’s head of government bonds Quentin Fitzsimmons stated that it is the size of the world’s economic slowdown that will continue to drive the need for lower interest rates in the future.