Interest rates to remain low, says expert

Interest rates are likely to remain at the all-time low of 0.5 per cent when the Bank of England's Monetary Policy Committee (MPC) meets later this week, it has been claimed.

Michael Baxter, editor of Investment and Business News, said that despite GDP figures showing economic growth of 1.1 per cent in the second quarter of 2010, the MPC is unlikely to make any changes.

The expert said the committee is likely to tread cautiously as the next three months are set to pose a challenging time for the economy.

"I think the majority are going to vote for it to stay at its current level. The feeling is that the third quarter isn't going to be so good," he said.

The expert also claimed that the threat of a double-dip recession remains while the country waits to see the impact of various government initiatives.

"We are entering slightly unknown territory and it is going to take a while, it is going to take six months to a year, before the full impact of these austerity drives are felt, and there has to be a significant chance that the double-dip recession will be the result," he added.

7th August, 2010

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