Interest rate ‘to remain at 0.5% next year’

Britain’s base rate is unlikely to rise in 2010, one expert has said.

Economist Benjamin Williamson at the Centre for Economic and Business Research remarked that his organisation does not expect the marker, which can impact on loan rates, to increase from 0.5 per cent in 2010.

He explained this will be the case “partly to counteract the expected sharp fiscal contraction, but also because the recovery does remain weak, so they have got to keep borrowing costs down”.

The statement serves as a contrast to a prediction issued by the Confederation of British Industry on September 23rd that the rate will reach two per cent by the end of next year.

Mr Williams’s comment came prior to the Monetary Policy Committee (MPC) vote to retain the rate at 0.5 per cent for the eighth month running yesterday.

The MPC also announced that its asset purchases programme, worth £175 billion, is in its final stages and is expected to reach completion by next month.

By Anna Anderson