Interest rates expected to remain low Go compare with our comparison table

Interest rates expected to remain low

10 May 2010 / by Lois Avery

The Bank of England is expected to keep interest rates on hold today amid political turmoil and economic uncertainty.

The Monetary Policy Committee, who are responsible for setting the Bank of England's base rate, are due to meet today after their monthly meeting was delayed from last week because of the election.

But following the indecisive outcome of the general election stock markets, the pound and government bonds are set for wild swings this week.

Because of this it is expected that the base rate will be kept at a record low of 0.5 per cent and quantitative easing will be halted to ease inflation and try to calm investor’s fears.

Commenting on the economic uncertainty Dr Stephen Barber ,who advises Selftrade on economics, says it’s not time to panic: “Markets, as everyone knows, dislike uncertainty and the 2010 general election has been as uncertain as any in a generation. The markets have been the focus of considerable attention with bond markets opening specially in the early hours of the morning as polls closed. Investors need not fret.

“While economic circumstances are fraught across Europe, the fact that no party achieved an overall parliamentary majority should not mean that prices come crashing around us.”

The Bank of England’s governor Mervyn King will shed more light on the Bank's latest views on the recovery, and inflationary threats, at a press conference detailing the publication of its latest quarterly Inflation Report on Wednesday.

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