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No base rate rise expected till 2014 “at the earliest”

  • 21/07/2011
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No base rate rise expected till 2014 “at the earliest”
Interest rates will not rise until 2014 “at the earliest,” experts have suggested, after the Bank of England said it is unlikely to change its monetary policy stance soon.

The July minutes of the Bank’s Monetary Policy Committee (MPC) showed members voted seven to two to hold rates at 0.5%, with it saying that recent economic data makes it unlikely it will raise rates in the near term.

The news came a day after Woolwich launched its cheapest mortgage deals for 15 years, reducing rates on a third of its fixed and tracker mortgages.

Vicky Redwood, of analysts Capital Economics, told the Daily Express that a base rate increase is looking less likely than before.

She said: “Our long-held view is that interest rates will remain on hold. We are not expecting interest rates to rise now until 2014 at the earliest.”

Economic forecasting group Ernst & Young’s ITEM Club also said that it expects base rate to remain the same until 2014.

The historically low base rate, first introduced in March 2009, could be here for at least another 12 months, according to other financial experts.

Howard Archer, an economist at forecasters IHS Global Insight, told the Express the latest MPC minutes show that the committee is increasingly concerned about the current weakness of the economy and the outlook.

Other economic analysts have said the Bank is “between a rock and a hard place” with both growth deteriorating faster than expected, and inflation pressures remaining high.

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