Current account interest rates could stay low, suggests Ernst & Young

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Current account interest rates could stay low, suggests Ernst & Young

Wed 8th Dec 2010

Comments made by an expert from Ernst & Young suggest that the low interest rate environment currently being seen in the UK could be set to continue for a long time.

Andrew Goodwin, senior economic adviser to the company's ITEM Club, claimed the Treasury needs to keep its fiscal policy relatively "loose" over the next three or four years in order to counteract the impact of the public spending cuts.

In his view, this means interest rates are likely to stay low for a fair amount time, with no change expected at this week's Monetary Policy Committee (MPC) meeting.

"In terms of the two outliers on the committee, Andrew Sentance and Adam Posen, I don't think anything has really happened that will change their view," added Mr Goodwin.

Last month, the MPC voted to keep the base rate at 0.5 per cent, meaning there has still been no change to this levy since March 2009.

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