Reason Interest Rates Held Again

Reason Interest Rates Held Again.

The Bank of England’s Monetary Policy Committee last Thursday once again voted to keep the base rate on hold at 0.5% and also opted to maintain the size of the Asset Purchase Programme at £200bn.

Interest rates have held at 0.5% since March 2009.

We suggest the answer to this is plain and simple.  This Government and the Bank of England are intent on maintaining a steady inflation rate of c4-5% pa for the next ten years.

By doing so, our record sovereign debt, a legacy of unparalled borrowing by previous governments, will be devalued by up to half without ever repaying it over the period.

Our advice is to expect prices and wages to increase, as they did in the 1980’s.  See Winter of Discontent 2 article.