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Interest rates remain at record low

Interest rates remain at record low

Category: Economy

Updated: 10/05/2010
First Published: 10/05/2010

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 It is now over 6 months old so the content may be out of date.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 Bank of England's Monetary Policy Committee (MPC) has voted to keep the official bank base rate of interest at 0.5% for the fourteenth month in a row.

With uncertainty still surrounding how the government will eventually look following the hung parliament delivered by last week's general election, the decision to leave the rate at its record low for at least another month comes as little surprise.

The previous change in the Bank of England base rate was a reduction of 0.5 percentage points in March last year.

The news means savers will have to continue to shop around to find the very best savings account rates available.

Homeowners, on the other hand, particularly those with a tracker mortgage linked to the base rate, will continue to benefit from some of the best mortgage deals seen for many a year.

The Bank also announced that it will not pump any more money into its programme of quantitative easing (QE).

Introduced to help kick start the economy, the last time the initiative was enlarged was November 2009, when the addition of a further £25 billion took its total value to date to £200 billion.

"Despite positive reports that the economy is improving, the UK recovery is still vulnerable," said David Kern, chief economist at the British Chambers of Commerce.

"Businesses are facing serious pressures and a double-dip recession is still a potential threat that must be avoided. The election result has triggered adverse reactions in the markets, and increases the risks to our credit rating.

"Given the dangers facing the economy, the MPC must persevere with expansionary policies. Any consideration of raising interest rates, and withdrawing the QE stimulus, must be rejected until evidence shows that growth is secure."

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