Following the Bank of England’s Monetary Policy Committee’s meeting for March, the country’s base interest rate has been maintained at its historic low of 0.5 per cent for yet one more month.
Originally lowered to its current rate during the reign of the Labour party in March of 2008, the global economic downturn has prevented policymakers from raising the base rate for the past 24 months. This led several business bank account industry officials to believe that its time had come, prompting predictions that the MPC would raise the rate to combat runaway inflation that is eroding the funds Britons have been depositing into their savings accounts.
Inflation has grown to 4 per cent recently, which is double the 2 per cent target rate set by the Coalition government. Industry experts maintain that raising rates would aid in bringing inflation under control, which has led to increasing levels of pressure for the MPC to take action.
Many have breathed a sigh a relief that the base rate has remained unchanged, however. Those with variable rate business loans or mortgages are especially keen on keeping rates low in order to avoid having the cost of their monthly repayments grow.
Many industry insiders have been actively speculating in regards to when the base rate will finally be increased. Several are of the belief that a rate hike will be coming later in 2011, but one official stated that much depends on the MPC’s mood during their monthly meetings.
The official stated that despite the recent vote to maintain the current rate there is growing support for an increase soon. He additionally said that none would be shocked if this resulted in a rate hike in the coming months.