Bank of England indicates low interest rates are here to stay
Despite a number of prominent economists suggesting that UK base rates could increase in the latter part of 2010, predominantly to protect the economy against the threat of inflation, the Bank of England has made it be known that rates are likely to remain low for the foreseeable future. This is the clearest indication that the Bank of England sees no real threat from inflation at the moment although as with any other element of the UK economy at the moment, this could change!
After the problems within Europe it is becoming more and more obvious that investors are jittery and looking for guidance from the likes of the Bank of England and the UK government. At the moment the UK government is effectively paralysed and it is down to the Bank of England to take on the mantle of market guardian and offer assistance where possible.
There is speculation that the Bank of England may well have a better relationship with a Conservative government than it has done with the Labour government where there has been friction between Gordon Brown, Alastair Darling and Mervyn King. Whether this is correct remains to be seen but changes are afoot no matter which party takes control.
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