The Bank of England has held interest rates at 0.5% for the 31st month in a row after the rates were lowered in March 2009.
With the increased cost of living aggravated by the price rises from utility companies many people are asking the question “how much longer can interest rates remain low”?
If the Bank of England were to raise the base rate it could have a detrimental effect on home owners who are already in debt or struggling financially. many savers however are being forced into using their savings to supplement pensions or salaries.
Saver groups are now calling for interest rates to increase after a report found that savers had lost £43bn since interest rates fell while mortgage borrowers have gained £51bn.
Simon Rose from Save Our Savers commented “The Monetary Policy Committee (MPC) decision to cut it to 0.5% in March 2009 was because the February Inflation Report had implied a substantial risk of undershooting the 2% CPI inflation target”
He continued “31 months later, the situation is rather different. CPI inflation is 4.4%, yet bank rate is still 0.5%. The MPC’s inaction over base rates is odd, given that the MPC’s role is explicitly to set an interest rate that it judges will enable the Government’s inflation target of 2% to be met”