Interest rates 'won't move next year'

The Bank of England is unlikely to increase its base rate of interest from 0.5 per cent in 2010, the Centre for Economic and Business Research (CEBR) has claimed.

As expected, the Bank’s Monetary Policy Committee announced that interest rates would remain at 0.5 per cent for the seventh month in a row yesterday (October 8th).

CEBR economist Benjamin Williamson said he does not envisage the base rate changing next year as the Bank remains cautious over economic recovery.

’The Bank of England will maintain loosened monetary policy over the next year,’ he commented.

Mr Williamson claimed that the Bank’s policymakers will look to keep interest rates at 0.5 per cent to ’counteract the expected sharp fiscal contraction’ and keep the cost of borrowing down in 2010.

His predictions challenge a recent forecast from the Confederation of British Industry, which claimed that the base rate will begin to rise in spring 2010 and reach two per cent by the end of the year.
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