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Interest rates held again

Yesterday`s decision to keep the base rate at 0.5% came as little surprise to most economists.

Reuters provides proof of this, telling us that 66 of the 67 economists it polled had predicted this decision. Just one had expected the rate to change.

Even so, it`s something the Bank of England is facing criticism for. With CPI inflation standing at 4.4% (and RPI inflation at 5.5%), many are calling for the rate to increase, to try and stop prices rising so rapidly.

It`s a difficult decision for the Bank, though, since raising the rate could easily put a lot of pressure on the economy. With so many homeowners facing higher mortgage payments, we could see a lot less money spent in the shops - especially as many of those homeowners might see a rise as just the first in a series of increases, leading them to be even more cautious with their money.

"Whatever the implications for the economy, a hold on the base rate is still good news for a lot of homeowners in the UK," said a spokesperson at the IVA Advisory Centre.

"On the other hand, people with savings are unlikely to be pleased. They`ve seen the interest rates on their savings plummet - the base rate has been at 0.5% for over two years now - and it`s very worrying for people who rely on their savings, especially now that high inflation is reducing the actual value of their money.

"We`d recommend that anyone who`s worried about their finances talks to an expert sooner rather than later."



The IVA Advisory Centre is a licensed Insolvency Practice, offering expert debt advice as well as IVAs and a comprehensive range of other debt solutions. If you are in debt and would like to explore your options, contact one of our advisers today.