Interest rates remain at 0.5 per cent despite inflation fears
06 August 2010 / by Lois Avery
Interest rates were kept at an all time low of 0.5 per cent yesterday sparking concern that the UK economy is not recovering as well as expected.
The Bank of England’s Monetary Policy Committee voted to keep rates unchanged for the 18th month running despite suggestions that the economy is recovering and fears about spiralling inflation.
The bank’s £200billion quantitative easing (QE) programme also remained unchanged.
Economists now believe that the rate will remain unchanged for some time as the economy enters a slow down following a period of growth during the first half of this year.
The move has suggested that the BoE does not see inflation as a real concern. Inflation is still well above the bank’s target rate of 2 per cent on the Consumer Prices Index (CPI) measure.
However, experts widely agree that the MPC is doing the right thing in keeping the base rate low.
Speaking to the BBC David Kern, chief economist at the British Chambers of Commerce said: “The MPC made the right decision.
“The tough deficit-reduction measures announced in the Budget, although necessary, will inevitably increase the threat of a UK economic setback.
“Given the precarious economic background, it is absolutely vital that the MPC maintains the current low level of interest rates until the second quarter of 2011 at the earliest.”
Caxton FX agrees, saying that whole the economy enters a period of uncertainty rates must stay low.
A spokesman said: “With budget cuts implemented and the debt crisis in the eurozone, the UK economy is unlikely to offer up the same level of growth in the third quarter as it did in the second. In fact economic figures for July already reflect a slight slowdown in activity.
“In the short term, the Bank can do little about inflation and so policymakers are likely to continue taking a wait-and-see approach whilst the outlook remains so uncertain.”
© Fair Investment Company Ltd
| Product Name | ISA Option | Income Yield | More Info | |
|---|---|---|---|---|
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Investec FTSE 100 Income Deposit Plan |  |
3.50% per annum |
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| 6 year capital protected deposit plan paying a potential income of 3.50% annually or 0.28% monthly. Also available for Cash ISA and Cash ISA transfer. | ||||
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Strategic Bond | |
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Invesco Perpetual High Income Fund | |
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| One of the UK’s most popular income funds, the Invesco Perpetual High Income has delivered consistently good long term returns through a variety of market conditions. Income is paid to you twice yearly. Up to a 100% Discount off the Standard Initial Fund Charge. Click here to view latest Fund Facts » |
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M&G; Corporate Bond Fund | |
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| The M&G; Corporate Bond Fund is a conservative ‘blue chip’ sterling fund that aims to produce a higher return than UK government bonds. Income is Paid to you Quarterly. 100% Discount off the Standard Initial Fund Charge. | ||||
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Jupiter Merlin Income Portfolio | |
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| The Jupiter Merlin Income Portfolio fund aims to achieve a high and rising income with some potential for capital growth. Income Distributions are made to you quarterly. 95% Discount off the Standard Initial Charge. Click here to view latest Fund Facts » |
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The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below.
| Product Name | ISA Option | Maximum Potential Return | Term | More Info | |
|---|---|---|---|---|---|
|
FTSE 100 Enhanced Kick Out Plan | |
10% per annum |
Up to 6 years |
More Info > |
| Structured investment plan with the potential to mature after years 1, 2, 3, 4, 5 or 6. If the plan matures early it will return 10% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer. | |||||
|
FTSE 100 Kick Out Deposit Plan | |
6% per annum |
Up to 6 years |
More Info > |
| Capital protected deposit plan with the potential to mature after years 3, 4, 5 and 6. If the plan matures early it will return 5% times the number of years the plan has been in force. Also available for Cash ISA and ISA transfer. | |||||
The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below.
| Service | ISA Option | Minimum Investment | More Info | |
|---|---|---|---|---|
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Share Trading Account Plus | |
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| Trade in a wide variety of investment options including International Equities, Warrants and Covered Warrants. Frequent traders get a reduced rate of £8.95 | ||||
The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below.
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