The Bank of England’s Monetary Policy Committee has once again decided to keep the base interest rate on hold at 0.5 per cent for yet another month.
The base rate, which has been at an historic low for more than two years straight, may be providing relief for many repaying business loans due to plummeting repayments, but others have decidedly not been so lucky. With the base rate so low, interest rates on savings accounts have been lagging behind, and runaway inflation has just made matters much worse.
The base rate will most likely remain at its current level throughout the rest of 2011, economists have now predicted. Some industry experts even believe that the 0.5 per cent base rate could extend well into 2012, according to a recently conducted research survey.
Many personal and business bank account experts are not surprised in the least that the base rate has been placed on hold for yet another month, as the MPC has expressed fears of jeopardising economic growth and recovery by increasing it out of turn. As many people will benefit from the decision to keep rates down, such as holders of variable rate loans, just as many have expressed frustration with runaway inflation in the UK, and have exhorted the MPC to do something to curb its rampant growth.
The MPC need not actually increase the base rate to get a handle on inflation, according to one group. The British Chambers of Commerce’s chief economist, David Kern, said that an increase to the quantitative easing scheme is one such solution.
Mr Kern remarked that every possible effort must be made to revitalise and reinforce the economy in the UK. If the economy continues to weaken, he added, the MPC should take quick, decisive action in increasing the QE programme.