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Groundhog Day as interest rates are held once more

Groundhog Day as interest rates are held once more

Category: Economy

Updated: 08/07/2010
First Published: 08/07/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The base rate of interest has been frozen at its historical low point of 0.5% once again.

The decision, which was widely expected, was announced by the Bank of England's Monetary Policy Committee (MPC) at noon today.

It will not be known until later in the month whether the judgement to peg interest rates at 0.5% for the sixteenth month in a row was taken unanimously.

Minutes from June's MPC meeting showed that there was a split in the camp, with Andrew Sentence favouring a 0.25% rise to 0.75%, although all other seven members voted for a freeze.

A slight slow in the rate of inflation meant that a rise was less likely.

There is mixed opinion on when interest rates will eventually rise, with some predicting an increase before the end of the year. Others have said that they will not climb before 2011 at the earliest.

All this means more pain for savers who have seen the rate of return on their funds fall markedly in this low interest rate environment.

All is not lost, however, as there are still a number of cracking rates to be had in the savings market.

The pick of the bunch includes the 3.00% paid on one year bonds from Northern Rock and Barnsley BS.

Those willing to tie their money up for longer can get a rate of 4.10% with Lloyds TSB's three year fixed account, while ICICI Bank pays 4.75% on its five year bond.

By contrast, today's announcement is likely to raise a cheer with tracker mortgage customers, who are enjoying some of the lowest interest repayments in history.

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