Belfast Telegraph

Interest rates remain at a record low

By John-Paul Ford Rojas

Six years of interest rates at the historic low of 0.5% were marked as the Bank of England again kept borrowing costs on hold.

They have been at the same level since March 2009 when policymakers took emergency action to stimulate the economy at the height of the financial crisis.

The recovery over the last couple of years has brought the prospect of a hike closer, but with inflation at a record low of 0.3% and expected to turn negative in coming months there seems little reason for one yet.

Even hawks on the Bank's monetary policy committee (MPC), who at the end of last year had been voting for a rise, have abandoned their dissent to back the status quo at the last couple of monthly meetings.

It is estimated that savers have lost £130bn as a result of six years of rock-bottom interest rates, the equivalent of £5,000 for every household in the UK, according to financial services firm Hargreaves Lansdown.

Speculation has been focused on whether the nine-member MPC will choose to hike rates later this year or wait until 2016.

Minutes of last month's meeting showed signs of a three-way split with two members increasingly convinced there should be an increase in 2015 but one viewing a cut as just as likely.

Governor Mark Carney raised the possibility of rates going down should low inflation persist for longer than expected - though he still expects the next move in Bank policy to be a rate rise.

Belfast Telegraph

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