Bank set to chalk up six years of low interest rates
SIX years of ultra-low interest rates will be marked this week when Bank of England members vote to keep the cost of borrowing on hold.
With inflation at just 0.3 per cent in January and set to dip into negative territory in the coming months, policymakers will be under no pressure to end a run that has kept rates the same at 0.5 per cent since March 2009.
Most City economists think borrowing costs will be untouched until later this year, particularly in light of uncertainty over the eurozone's recovery
Most City economists think borrowing costs will be untouched until later this year, particularly in light of uncertainty over the eurozone's recovery.
It is thought that Bank members, including governor Mark Carney, will want to see the outcome of pay settlements in the first few months of the year before deciding that the threat of prolonged period of deflation has passed.
Recent figures have been encouraging, with annual growth in average weekly earnings picking up from 1.9 per cent to 2.4 per cent in December.
Samuel Tombs, senior UK economist at Capital Economics, said the picture should be clearer by the summer, with the UK on course to avoid a damaging deflationary spiral.
