The Bank of England has decided to hold base rate at 0.5% for another month, taking us through seven whole years of interest rates at all-time record lows.
The Bank is now basing its own forecasts on market expectations of the first rise in mid-2017.
Interest rate markets are now pricing in a one in three chance of a cut in interest rates this year, compared to a one in twenty chance of a rise.
The big losers from the past seven years have been cash savers, who have seen their interest vanish before their eyes. Number crunchers at investment platform Hargreaves Lansdown estimate cash savers have lost out on £160 billion in interest payments since the financial crisis of 2008.
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Many people are still enjoying low mortgage payments as a result of loose monetary policy. However, the danger is the longer interest rates stay low, the more comfortable people get with higher levels of debt. This could result in more pain for consumers if rate rises eventually prove to be.
Laith Khalaf, senior analyst, Hargreaves Lansdown says: “An interest rate rise is like the pot of gold at the end of the rainbow, the nearer you get to it, the further away it moves.
“A rise in rates now looks firmly in the long grass, with growth forecasts cut and cheaper oil putting downward pressure on inflation, which is already way below the Bank of England’s target.
“Markets are currently pricing in a rate rise in the middle of 2017, though they have been consistently premature in their forecasts, and reaching the dubious milestone of a decade of ultra-low interest rates is now a distinct possibility.”