How Long WIll Interest Rates stay at 0%?

source: BBC

Interest rates could stay close to 0% for a long time, if the recession continues to worse and unemployment rises. The latest inflation forecast suggested CPI inflation will fall below the government’s target and stay around 1%. Since this rate is below the governments target this will keep interest rates low.

However, despite the magnitude of the recession, government policies mean inflation could return in a couple of months. If it did interest rates would rise.

Inflationary policies include

  • Large depreciation in the Pound
  • QUantitative easing (increasing money supply)
  • Budget deficit of 12% of GDP

See also: Interest Rate predictions