Bank set to hold interest rates
Thursday 9th April 2009, 9:01AM BST.
The Bank of England is expected to hold interest rates at its historic low of 0.5 per cent later today.
Analysts claim further cuts are unlikely as the monetary policy committee (MPC) has already expressed concerns as to how very low interest rates would affect the profitability of lenders, sandwiched between maintaining higher savings rates and low borrowing rates.
The main attraction from the decision from the monetary policy committee (MPC) at 12:00 BST today will be how the policymakers are dealing with their new quantitative easing tool.
The chancellor Alistair Darling has initially allowed the MPC to create £75 billion for the purpose of buying assets to stimulate the economy.
Experts predict interest rates could remain at 0.5 per cent even into next year.
Howard Archer at IHS Global Insight said: “We suspect that interest rates are set to stay at 0.5 per cent well into 2010 as we believe that GDP will contract through this year before the economy hopefully stabilises in early 2010 and then starts to gradually recover,” said
“The UK clearly currently remains deep in contraction territory with a return to growth still looking some way off.”
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So that’s that then. Pensioners and other who rely on modest interest rates to subsidise their measly pensions will continue to be devastated. Most of these will be existing on the basic State pension having been “means tested” out of any benefits or enhancements and yet all benefits, including “pension credit” and other handouts to those who have not saved – and in many cases not contributed will have had raised benefits on 6th April.
In affect, this will put many responsible and thrifty pensioners worse off than those who are wholly living on state handouts.
If the papers are telling the truth, Brown said today that he does not intend to compensate pensioners for the loss of their savings interest, so once again we are unfairly treated, mortgagees are better off by hundreds of pounds a month, pensioners are worse off by hundreds of pounds a month.
Thank you Mr Brown, it will be remembered on polling day.
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