Interest rates held again

The Bank of England's Monetary Policy Committee has kept rates at 0.5% and is not extending its programme of pumping money into the economy - yet.

The Bank of England has held UK interest rates at 0.5% for the 33rd consecutive month. This comes as no surprise as the members of the Bank’s Monetary Policy Committee (MPC) voted unanimously in November to keep rates on hold.

It has also announced that it will not be extending the quantitative easing (QE) scheme, meaning it is not prepared to pump more money into the UK economy. However, many experts believe it will do so in the early part of next year.

The MPC is likely to have been influenced by a host of external factors in reaching its decision. These include the ongoing Eurozone crisis, a fall in industrial output, weak high street sales and declining house prices.

And the Bank has continued to indicate that these are bigger concerns than tackling inflation, which is currently 3% above its 2% target.

With the economic situation so volatile, some economists are now predicting interest rates won’t rise until 2015.

What it means for you

If you have a mortgage that tracks the Bank of England base rate, such as a tracker or variable rate, you’ll carry on paying the same repayments.

For savers, the news continues to be grim. Inflation continues to erode the value of many of our savings pots, particularly if you don’t want to lock away your savings for a period of time.

If you can afford to lock some money away in a fixed-rate account, we’ve picked the top accounts on the market in this article.

At the same time as the Bank of England was making its interest rate announcement, campaign group Save Our Savers was protesting about continued low interest rates.

Look out for a video report on this and the dilemma of low interest rates next week on lovemoney.com

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