Bank of England base rate set to stay low

by Aaron Strutt

Feb 14 2014

Interest rates may stay on hold for another year and potentially until after the next election, the Bank of England (BoE) has suggested.

The BoE is expecting the UK economy to grow 3.4% in 2014, compared with its previous 2.8% forecast. Low interest rates are seen as a real driver behind the higher predicted growth figures.

Mark Carney, governor of the Bank of England, announced earlier this week that there will no longer be a direct link between interest rates and unemployment figures.

If the base rate is kept on hold for another year, it is difficult to see mortgage rates rising by any considerable margin. This is particularly as the BoE Monetary Policy Committee has said interest rates may need to be “at low levels for some time to come”.

Conservative MP Mark Garnier, a member of the Treasury committee, told the Evening Standard: “His (Mark Carney's) signal that interest rates will stay low for a long time is recognition of the huge problem of debt built up by households during the Brown years.”

February 14, 2014