Interest rates set to stay low for at least another two years


Experts believe that as the economy continues to exhibit signs of slowing, interests are set to be unchanged for at least another two years.

The next move could even be decreased from 0.25pc to 0.1pc. if the economic outlook gets even worse. The latest figures for both business investment and consumer spending published last week were very weak.

Earlier this summer, the Bank of England suggested that conditions were looking up even though the rates have not been increased for a decade.However, those hopes were scotched by the latest official data. Analysts are also more convinced that about the decreasing chances of policy tightening.

“Our forecast is for rates to remain unchanged as far as the eye can see, which for us means the end of 2018,” economist at RBC Capital Markets, Sam Hill, said.

Hill assumed that the Monetary Policy Committee might decrease rates until comments from policymakers including the Bank’s chief economist, Andy Haldane, declare that the base rate could be raised.

But the consumer spending’s weakness and the decrease in the savings ratio now suggests that Mr Hill is once again contemplating the possibility of a rate cut.

Hill stated: “The challenge we see with the Bank’s current outlook is that they’re relying on the idea other parts of the economy will make up for weakness in consumer spending.”

The standpoint also depends on smooth Brexit negotiations, a premise the Bank has developed into its models.