Interest rates stay at 0.5% as recovery weak
Interest rates have been held at a record low of 0.5% for the 36th month in a row amid evidence that the benefits to borrowers are slipping away.
The Bank of England's Monetary Policy Committee (MPC) maintained the base rate as some experts predicted it could be held at the same rock-bottom level for another three years - causing great pain for savers.
But lenders have recently started to put up mortgage costs, including Halifax and RBS NatWest, amid the weak economy and the fallout from the eurozone crisis.
The Bank also held its quantitative easing (QE) programme - otherwise known as money-printing - at £325bn after last month's £50bn cash injection.
Economists have said it would take a seismic change in the economic and inflationary landscape to bring higher interest rates back to the table.
Esmond Birnie, chief economist at PriceWaterhouseCoopers in Northern Ireland, said that it predicted very weak recovery at best with UK economic growth of 0.6% this year and 1.8% predicted next year.
"However, the outlook for Northern Ireland and other UK regions is considerably more subdued suggesting minimal growth, at best, for the rest of this year," he said.
"Uncertainty and volatility" continued to characterise the eurozone ahead of last night's deadline for Greek creditors to volunteer for a 'haircut' - eurospeak for a writedown in the amount of money they expect to get back.
Adding to the uncertainty, the UK government's National Security Strategy (NSS) committee yesterday told ministers to draw up plans to deal with a collapse of the eurozone, 'as a matter of urgency', saying that a full or partial collapse of the single currency area was a "plausible scenario".
The combination of low rates and high levels of QE have been particularly painful for savers and those approaching retirement, although most homeowners have benefited, given the bank's base rate stood at 5% in October 2008.
The typical savings rate has plummeted from 6.52% in 2008 to 2.78%, since the bank starting cutting borrowing costs.
It is thought that more than £100bn is sitting in accounts which pay no interest.
Meanwhile, around £90bn has been knocked off the value of final salary pension schemes due to recent QE measures, according to the National Association of Pension Funds.
The typical savings rate which was 6.52% back in 2008