Interest rate remains at 5%, but for how long?

11 December 2006

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<div class="rxbodyfield" xmlns:o="urn:www.microsoft.com/office" xmlns:st1="urn:www.microsoft.com/smarttags" xmlns:st2="urn:www.microsoft.com/smarttags2" xmlns:w="urn:www.microsoft.com/word" xmlns:x="urn:www.microsoft.com/excel"><p>Interest rate remains at 5%, but for how long?</p><p>The Bank of England&#39;s (BoE&#39;s) monetary policy committee&#39;s (MPC&#39;s) decision to keep interest rates at 5% came as no surprise to the majority of economic commentators, but with many consumers taking out loans to fund Christmas spending, many now question how long they will stay at current levels.</p><p>In the US, Christmas loans have been big business for many years and now the UK appears to be catching onto the trend, with many lenders offering special rates for the festive period.</p><p>Yet with the average loan taking three months to pay off, consumers could be left paying more than they originally expected if Deloitte&#39;s predictions are accurate.</p><p>Roger Bootle from Deloitte claims that the interest rate will rise by a quarter of a percent by February. </p><p>He conceded that &quot;the case for higher interest rates has diminished somewhat over the last month&quot; but said that the drop in retail spending coupled with the US economy&#39;s effect will result in a rise to 5.25%, before returning to 5% by the end of 2008.</p><p>Global Insight economist Howard Archer took the opposing view, stating that he expected the rate to remain at 5%. </p><p>He claims that the BoE is now in &quot;wait and see mode&quot; which led Global Insight to &quot;lean towards the view that interest rates will remain at five per cent through 2007&quot;.</p><p>If you&#39;re looking for a cheap personal loan, uSwitch.com can help. <a href="http://www.uswitch.com/Loans/PersonalLoans.aspx?">Compare personal loans for free by using our impartial service and find the best in low rate borrowing.</p><p><a href="http://www.adfero.co.uk" target="_blank"><img alt="track" src="http://feeds.directnews.co.uk/feedtrack/dn.gif?feedid=362&amp;itemid=18006205" style="border:0 0 0" />&#169; Adfero Ltd</a></a></p></div>

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