Bank of England holds interest rates
The Bank of England’s Monetary Policy Committee has voted to keep interest rates at 0.75%.
It has stood at this rate since August 2018 when it was increased from 0.5%.
There had been speculation that the base rate could be cut due to low levels of inflation and sluggish growth.
However despite the expectation of a cut the news to maintain rates has been welcomed by the industry.
Giles Coghlan, chief currency analyst at HYCM, said: “In the lead up to today’s decision, many were predicting that interest rates could be cut once again.
“In many ways, the decision to leave interest rates at 0.75% is welcoming news. It also means that interest rates could rise in the coming months should the so-called ‘Boris bounce’ continue and confidence in the UK economy return.
“More generally, today’s announcement shows the Bank of England is erring on the side of caution – while the UK economy is in a stable position, there are still many unknowns on the horizon which could drastically impact investors, businesses and consumers. Brexit, of course, is chief among them.
“Ultimately, as has been apparent for some time, the current low interest rate environment means investors must look beyond traditional savings accounts to deliver competitive returns. Rising inflation means that money in saving accounts will only depreciate in value over time. That’s why, I believe the decision to leave interest rates below 1% will only encourage more people to look to other investment markets over the coming months in the search for more significant returns.”
Jerald Solis, director at Experience Invest, said: “In normal circumstances, interest rates being put on hold isn’t exactly a newsworthy event. Today’s announcement is different, however. It shows the Bank of England is cautiously optimistic about the future growth prospects of the economy, even with Brexit on the horizon.
“Yet with interest rates still below 1%, investors and savers will be looking at ways of making their money work harder. Indeed, amidst the continuation of low interest rates, last year a survey by Experience Invest found that 59% of property investors said they were actively seeking ways to make greater returns on their investments. This looks likely to remain the case for the coming months at least.
“With interest rates hovering below 1% for over a decade now, the question on everybody’s minds is how long it will be before the Bank of England is prepared to increase the rate of interest to a whole percentage.”
Paresh Raja, CEO at Market Financial Solutions, said he expects lenders to assess their rates moving forward.
He added: “The Bank of England treads carefully when deciding on the interest rate, so the fact they’ve decided to leave it at 0.75% is an important decision. Investor confidence is returning, and we are likely to see the markets post a modest performance in the aftermath of this announcement.
“Low interest rates work to the advantage of borrowers; I expect many lenders to review their rates and consider further cuts to ensure they have an edge of their competitors. When it comes to mortgages, however, this doesn’t necessarily mean getting a loan from a bank will become any easier.
“To minimise their risk exposure, banks are tightening their lending criteria, making it more difficult for investors and businesses to access finance they need to buy a property.
“Overall, I’ll be interested to see how this rate cut affects the property market, and whether the Bank will consider further rate hikes over the coming months depending on how Brexit plays out.”