Interest rates held at 0.5% by the Bank of England

The national interest rate has been held at the record low of 0.5% for another month.

Quantative easing, the Banks stimulus programme for the UK economy was also unchanged at £375 billion.

The rate was suggested to go up, as Mark Carney the Bank of England Governor has suggested rates will go up in order to curb the housing bubble, but this is now expected later on in the year.

If and when the rates increase, the rate is only expected to go up a very small percentile. The rate rise will be gradual and limited, a new normal rate has been mentioned, this would be 2.5% by 2017.

Forecasters expect the rate to reach 1.25% by then end of 2015 and only 2.0% by then of 2016.

There is not much pressure to raise the rates immediately as inflation has fallen, normally rates are increased to curb inflation. Inflation has fell to 1.5% in May well under the Bank of England’s target of 2%.

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