The Bank of England has announced that it will keep the base interest rate at a record low of 0.5% for at least another three years.
Speaking to the Daily Express, Vicky Redwood at Capital Economics said that they were “not expecting interest rates to rise now until 2014 at the earliest” meaning that those struggling with financial difficulties could be facing a much welcome break.
The exceptionally low interest rate could, however, be a bit of a double-edged sword, offering a lifeline to families in need whilst spelling more bad news for savers.
The 0.5% interest rate will mean that savings may begin to stagnate, growing at a painfully slow annual rate, while payments needed for mortgages could become much cheaper.
Whilst the news will come as a welcome relief to borrowers, it is worth considering the implications that could ensue from such a record low.
With savings failing to accrue much interest, it is unlikely that spending is going to drastically increase anytime soon, with customers retaining a tight hold on their finances.
According to the Daily Mail, the Bank of England is keeping the base rate low in order to “stimulate Britain’s struggling economic recovery” – hoping that the incentive will give people the financial freedom needed to promote economic growth and improvement.
The problem with this low interest rate, however, is that unfortunately it will have to increase at some time over the next few years.
When this happens it could be by either a small amount, or a much larger one, meaning that the future for Britain’s economy remains as uncertain as ever. A quick and simple payday loan could therefore remain a short-term solution to increasing money problems by offering a short-term loan payment to cover unexpected costs in these uncertain times.
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