Corporate banking customers happy with static interest rates?

Interest rates are likely to remain unchanged for the foreseeable future, according to one economist, a decision that may affect corporate banking customers in the coming year.

Ernst & Young senior economic advisor Andrew Goodwin expects the Monetary Policy Committee (MPC) to retain current rates of 0.5 per cent at its monthly meeting today (December 9th) because of public spending cuts.

Mr Goodwin said the severity of the coalition government's fiscal tightening over the next few years means monetary policy will have to remain "pretty loose" to offset the negative economic effects.

"We are expecting rates to be on hold this week and also further into the future," he said.

The last change was in March 2009 when it was reduced from one per cent to the present level.

A poll of leading economists compiled by Reuters, published earlier this month, predicted the price of borrowing will end 2011 at 0.75 per cent. ADNFCR-2318-ID-800281331-ADNFCR