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Bank interest rate to remain at 0.5% well into 2010

09 September 2009 / by Rebecca Sargent

The Bank of England is expected to hold the base interest rate at 0.5 per cent for the sixth consecutive month tomorrow, and experts do not expect rises until 'the latter months of 2010'.

The Monetary Policy Committee first slashed interest rates from one per cent to their record low of 0.5 per cent in March, and they have remained there ever since, bringing savings rates down with them and increasing the cost of lending.

And according to industry experts, no change is expected in the Committee's September announcement due tomorrow or in fact until 2010. Howard Archer, economist at Global Insight says:

"The September meeting will undoubtedly see interest rates left at the record low of 0.5 per cent.

"Indeed, we do not expect any rises until at least the latter months of 2010."

In last month's meeting, the Committee voted to increase the quantitative easing scheme by £50billion, bringing the total to £175billion, and while Mr Archer is not ruling out further increases in this, it seems September may be too soon.

He adds: "The current QE spending program by the Bank of England will last until the beginning of November, so there is no pressing need for the MPC to lift the amount."

Meanwhile, as the future for interest rates remains bleak, consumers will be hoping that competition in the markets will continue to drive lenders to offer savers higher rates.

Michelle Slade at Moneyfacts.co.uk said: "While variable savings rates have fallen over the last six months, they have started to go up again in recent weeks as providers look for other avenues to attract savers' money.

"Consumers will be hoping that as more time passes competition will become an increasing factor and that they will be offered more attractive deals across all finance sectors."

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