Low interest rates ‘will last for a long time’

The next few months could be the ideal time to make efforts to clear debt as one expert believes interest rates will remain low for a long while.

Hetal Mehta, a senior adviser on economic matters to the Ernst & Young Item Club, said that the Bank of England’s Monetary Policy Committee will definitely keep the country’s base rate down as inflation is expected to be significantly below the government’s two per cent target.

She pointed to governor Mervyn King’s admission that he will probably have to write to the chancellor to explain why inflation is one percentage point lower than the goal at some point later this year.

Because of this statement, Ms Mehta suggested it was surprising that the Bank had not increased its quantitative easing programme even further when it expanded it earlier this month, as putting more money in could potentially bring the inflation rate more in-line with the two per cent mark.

By Chris Trimble


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