The Bank of England’s Monetary Policy Committee has voted unanimously to maintain interest rates at 0.1 per cent.
The move, a result of the central bank’s meeting on Wednesday, was accompanied by the prediction of a recovery much stronger than previously thought.
In a statement, the Bank of England said: “Global GDP growth is likely to have slowed in 2021 Q1 as Covid-related restrictions weighed on economic activity, although growth appears to have been stronger than expected in the February Report. Covid vaccination programmes have progressed and picked up pace in many countries. Recently, however, new Covid cases have increased significantly in India and some other economies, leading to tighter restrictions.”
Andrew Megon, executive chairman of My Pension Expert, said that the move would help to restabilise the economy, adding that it was wise to refrain from lowering base rates further.
Others were more sanguine. Denise Ko Genovese, senior personal finance editor at NerdWallet, said: “The Bank of England is clearly reluctant to destabilise the UK’s economic recovery, particularly as the country is just starting to emerge from lockdown. As such, holding interest rates at current levels will likely offer relief to some. That said, consistently low interest rates will never be ideal for cash savers. Low rates, combined with modestly rising inflation could lead to people’s savings stagnating, or worse yet, losing value in real terms.”