The Bank of England base rate could be on its way to reaching zero per cent, it has been suggested.
Charles Davis, a senior economist at the centre for economics and business research, has forecast that the interest rates may fall to zero or 0.25 per cent and remain at this level for “a very long period of time”.
“The real reason for that is that we have got a full-on recession, which could lead to deflationary pressures in the system,” he stated.
Such a reduction in the base rate could aid borrowers in making repayments on loans or mortgages, something that may help them become debt free in the future.
Mr Davis said that the UK should look to avoid deflation “at all costs” as it poses a “real, major risk” for the country.
On January 8th, the Bank of England’s monetary policy committee voted to slash the base rate to a historic low of 1.5 per cent.
By Jamie Price