‘No Bank of England interest rate hikes’ in 2010

Posted: 24 Dec 2009 11:40:59 GMT

There will be no Bank of England interest rate hikes for the duration of 2010 and perhaps even into 2011, one leading commentator states.

Alan Clarke, UK economist at BNP Paribas, says that the Bank of England is aware that fiscal policy will be tightened in the near future so it will not constrict interest rates ahead of this.

He adds that he believes interest rates will not rise for a long time and 2011 will be a “soft patch”, with gross domestic product growth close to zero and inflation below one per cent.

Mr Clarke concludes: “[The economy will] never properly get going because you have got the overhang of the financial crisis and the breaks coming on from fiscal policy.”

Bank of England interest rates currently stand at 0.5 per cent and at its last meeting the Policy Committee voted to keep them on hold for the ninth month in a row.

According to the latest figures from the Office of National Statistics, the British economy shrank by 0.2 per cent in the last quarter.

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