According to experts, it is possible that the interest rates will stay at record lows of 0.5% throughout the next year to support the recovery process in UK .
A rate hike was expected in the markets by the third quarter of 2010, with borrowing costs reaching 1.5% or greater by the end of the year. However, the banks forecast that inflation will undershoot the 2% target if this happens.
This suggests that borrowing costs will probably remain low for a long time, or the Bank can put in more efforts to enhance the money supply through its quantitative easing program, which currently stands at £200 billion.
After the Bank’s forecasts were published with interest rate rises, the pound lost more than a cent against the dollar as a result, although the forecasts are good news for those households with a tracker mortgage linked to bank rate.
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