Could the Bank Rate remain at the historic low of 0.5% until 2013?
This is the latest prediction from former Treasury adviser Roger Bootle, as the UK economic recovery remains “pretty weak”.
It comes only a day after Bank of England Governor Mervyn King ruled out the prospect of an early rate rise due to the “sheer volume of debt in the economy”.
Bootle, who now works as an economic adviser at Deloitte & Touche, also raises the prospect of a further round of quantitative easing. He commented in Bloomberg:
“The underlying momentum of the economic recovery looks pretty weak. My central forecast is still that rates remain on hold throughout this year and next.”
“It is not out of the question that the MPC will eventually need to give more support to the economy. But additional asset purchases, if they do come, are perhaps unlikely until 2012.”
We are not expecting to see any movement on interest rates or extension of the asset purchase programme at the next Monetary Policy Committee (MPC) meeting on Thursday.
We will have to then wait for a couple of weeks to see the minutes from this latest meeting and find out if any of the MPC members have changed their voting positions.
Savers and investors should keep a close eye on predictions such as these, as the prospect for continued low interest rates will have an impact on cash savings, the returns from the various investment asset classes and financial planning in general.
