Interest rates to remain at 0.5 per cent?

Posted: 09 Dec 2010 10:43:39 GMT

An expert has predicted interest rates will not change later this week.

First-time buyers may benefit if interest rates stay on hold, an economist has suggested.

Andrew Goodwin, senior advisor to the Ernst & Young ITEM Club, predicted the Monetary Policy Committee (MPC) will keep rates at the current level of 0.5 per cent.

He explained it will be surprising if the base rate changes, but he cannot see this happening and it will be a few years yet before it rises.

"The MPC is going to have to keep monetary policy pretty loose to try and offset the dampening effects of the tightening policy," Mr Goodwin remarked.

Nothing has happened that will alter the view of the two outliers on the committee Adam Posen and Andrew Sentence, he added.

According to a poll of industry experts by Reuters, rates will rise to just 0.75 per cent by the end of 2011.

And respondents indicated they will continue to be at 0.5 per cent until October next year at the very least.
 

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