Could the bank rate go even lower?
Published 23 May 2012 by Matthew Plant
A lot of people have been waiting for it to rise, but we could actually see the bank rate fall even further: the IMF has suggested another cut as one way of helping the UK economy grow.
It's been at its all-time low of 0.5% ever since March 2009, but now there's talk of lowering the bank rate even further.
The IMF (International Monetary Fund) made the suggestion after looking at ways the UK could get its economy growing again. Now that inflation's fallen to 3%, it says, bringing the bank rate down could be an option:
'With inflation well anchored,' the IMF website says, 'the United Kingdom has room to cut the interest rate set by the central bank and embark on further injection of money into the economy by the central bank by buying assets, a process known as quantitative easing.'
Changing the bank rate and 'printing money' (a common name for quantitative easing) are decisions for the Bank of England's Monetary Policy Committee (MPC) to make, but there are things the Government can do as well.
The IMF says that if the economy doesn't start improving, the Government should think about slowing down its austerity programme and focusing on growth and employment.
A spokesperson for thinkmoney commented: "The base rate can't fall much lower than it already is, since it's only 0.5%, but any further fall won't be welcomed by savers who've been waiting for the rate to rise so they can get some more returns on their savings."