Bank fails to increase savings interest rates

The Bank of England has acted as expected by freezing interest rates at 0.5 per cent for a further month.

With the general election yielding a hung parliament, many commentators believed political uncertainty would prevent the Bank's Monetary Policy Committee from taking any action on its base rate or quantitative easing.

But with interest rates frozen at their historic low since March 2009, a rise appeared somewhat unlikely regardless of the election.

According to Howard Archer, chief UK and European economist at IHS Global Insight, the MPC unsurprisingly judged that now is not the time to be raising interest rates.

"The downside risks to the still-fragile UK economic recovery are magnified by current major political uncertainty, and the recent heightened market turmoil resulting from the Greek crisis and contagion effects on other Eurozone countries," he said.

Consumers hoping for more attractive interest savings rates may be disappointed by the widely-anticipated decision, although it will be welcomed by homeowners on tracker and standard variable rate mortgage deals.

Moneyextra.com recommends you take independent financial advice before acting on any article

Back

2010-05-11 12:11:50 © Moneyextra.com