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Interest rates at turning point?

The recent announcement from The Bank of England that the base rate of interest would remain unchanged again came as little surprise to most analysts, however there is a feeling that the nine-month static period is now on the verge of change, with many believing that a downturn in rates is on the cards for the near future.

With the retail sector feeling the pain of a slowdown in consumer spending over the past months, there is certainly pressure from that sector for a cut to interest rates in order to encourage shoppers to return to the high street.

Whilst retailers would no doubt love to see a fall in the interest rates, the Bank has many more factors to take into account regarding the economy as a whole, and the recent report from the Monetary Policy Committee (MPC) suggests that they feel the slow down in spending is temporary, and that it will recover – albeit at a slower rate than previously thought.

All of this has led to speculation that whilst a rise in rates has effectively been ruled out for the foreseeable future, a cut in rates isn’t looking imminent. Many economists believe that we will see rates unchanged for a few months to come, with small reductions to follow in order to buoy the levels of spending.