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Economist predicts drop in unsecured loan rates

Economist predicts drop in unsecured loan rates

Category: Loans

Updated: 27/11/2008
First Published: 27/11/2008

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 It is now over 6 months old so the content may be out of date.

Interest rates have been predicted to continue to fall over the next year.

Michael Baxter, economist at research company Defaqto, suggested that the Bank of England could lower the base rate to one per cent by the end of 2009, which could lead to lower charges on unsecured loans.

He explained that such measures are often used to offset the risk of deflation, which is expected to be an increasingly growing problem.

Mr Baxter noted that Marks & Spencer's decision to hold a 20 per cent off sale last week is indicative of the struggling economy and low demand.

"That is a sign of things to come so I'm quite sure that inflation is just going to fall and fall and will probably go negative at some stage next year," he said.

The consumer prices index rate of inflation - the government's official measure - slowed in October, the Office for National Statistics recently revealed.

It dropped from 5.2 per cent in the previous month to 4.5 per cent.

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