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Weak growth could keep rates on hold all year

Weak growth could keep rates on hold all year

Category: Economy

Updated: 06/05/2011
First Published: 06/05/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Weak growth in the economy could mean that interest rates remain on hold for the rest of 2011.

The Bank of England's Monetary Policy Committee announced that rates would remain on hold for another month at least on Thursday

Earlier in the year, some analysts predicted that the base rate would rise in the spring, but weaker than expected economic data appears to have put that prospect on the back burner for the time being.

While savers will be disappointed by their seemingly never ending wait for rates to rise, many homeowners will be breathing a sigh of relief as the 0.5% rate has seen many mortgage payments dwindle, giving thousands of people some much needed financial breathing space.

With any recovery likely to be long and drawn out, the Council of Mortgage Lenders (CML) has said that any rise could well be pushed back to late summer at the earliest and, in all likelihood, into 2012.

"Although inflationary pressures persist, we believe the committee is likely to continue to be swayed by the poor state of household finances and their impact on consumer spending," said the CML.

"August now looks the earliest possible date for a rate rise, but weaker short-term prospects for economic growth suggest that the committee may hold off from any tightening for the rest of this year."

Continuing flat rates mean that savers need to work harder than ever to achieve a worthwhile return on their money.

The Moneyfacts.co.uk Best Buy tables are the place to begin your savings search, including accounts from FirstSave, Santander, Nationwide and Barclays.



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