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Base rate approaches two years at 0.5%

Base rate approaches two years at 0.5%

Category: Economy

Updated: 09/12/2010
First Published: 09/12/2010

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 It is now over 6 months old so the content may be out of date.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 is approaching two years at the historical low of 0.5% after it was confirmed the measure has been frozen for another month.

The Bank of England's Monetary Policy Committee (MPC) announced that interest rates would remain on hold at their current level of 0.5% at noon today.

The Bank's £200 million programme of quantitative easing will also remain on hold.

With the last change made to rates taking place back in March 2009, when they was cut from 1.0%, the base rate is fast approaching two years at 0.5%.

Minutes from meetings in previous months would indicate that Andrew Sentance will have voted for a small increase in interest rates, while Adam Posen would have voted for more quantitative easing.

They will have found themselves significantly outnumbered, however, with the vast majority of the MPC happy to keep things how they are, for the time being at least.

The minutes of the MPC's meeting will be released later this month.

While savers will no doubt be disappointed, if not surprised by the news, there is growing acceptance that the low interest rate environment has helped to give the housing market some stability.

The number of people falling into arrears or having their homes repossessed has been lower than was originally expected as low rates have made repayments more affordable.

Savers looking for a safe haven for their money for the next year should check the Best Buy tables where you can find one year fixed rate bonds from Barnsley BS, Northern Rock and the Post Office, all paying rates of 3.00% or more.

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