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Investors planning activity in the UK property market have been given a clear signal that the cost of borrowing is likely to remain at 0.5% for at least another 18 months.
Figures in the Bank of England’s market forecast suggest the UK will mirror the United States in keeping interest rates at record lows until 2013.
Governor Sir Mervyn King declined to follow his US counterpart Ben Bernanke in making a clear pledge to sustain low rates, but they figures echo the City’s view that inflation will be below its 2% target in two years’ time – even with rates remaining at around 0.5%.
The Bank could therefore hold off from raising rates until 2013, said economists, raising the prospect of an extended freeze in rates well beyond the current 29-month run.
This promises to bring more misery for pensioners and savers, who will continue to suffer low returns on their money, but has already driven the price of a fixed rate mortgage to an all-time low as lenders factor in a longer spell with the Bank’s base rate at rock-bottom.
Source: http://news.assetz.co.uk/articles/5840.html