Base Interest Rates The Base rate is the rate set by the Central Bank. It is the most important interest rate in the economy because it influences all the other interest rates. If the Central Bank cuts its base rate, it means it is cheaper for commercial banks to borrow from the Central Bank, this [...]

Predictions for Interest rates in the UK. How the MPC is likely to set interest rates in the coming months.

This graph shows the rapid decline in interest rates and inflation in the past couple of years. Some now feel the worst of the recession is over, and if the fragile recovery turns into a stronger economic growth, the interest rate cycle could be reversed with rates returning to levels of 5%. This would have [...]

Next year, the government will have to borrow at least £175bn. If economic forecasts prove worse than Treasury predicts, borrowing could be even higher. The large scale government borrowing has raised the prospect of future tax rises and spending cuts. What this means is that in 2010 and 2011, the government will bring in tax [...]

The Bank of England’s inflation report gives a strong indication that interest rates in the UK could fall to 0 – 0.25%. There is also an increasing likelyhood of quantitative easing – a policy of creating money to avoid the deflationary impact. (B of E report) The UK is facing its deepest recession since the [...]

Interest rates have become the main tool for influencing the Economy in both the UK and US. Interest rates have a significant impact on all aspects of the economy including: Investment decisions Exchange rates Housing market Inflation and economic growth. The future direction of interest rates, primarily depends upon forecasts for inflation and economic growth. [...]