Interest rates will stay low in 2011

Housing market economists and analysts are predicting that interest rates will stay low in 2011 passes, after a speech was made by the governor of the Bank of England.

President Mevyn King stated at the TUC conference yesterday that the financial system in Britain needs reform and is in full support of the spending cuts outlined by the coalition government saying that it is important that the government have a plan to deal with the situation.

Chief UK and European economist for IHS Global Insight, Howard Archer, stated that it is clear that King is supportive of the government’s plan to help reduce the amount of the budget deficit and he has taken the time to create a plan that will help get public finances back into a more sustainable state.

Archer continued to say that King highlighted the fact that if the credibility of the housing market is loss than interest rates will increase causing equal increases in the costs of mortgages and investment.

In addition Archer pointed out that King implied that the Bank of England can take more action to help stimulate the economy in the case that the housing market does fall backed by their credible policies.  However, King did not address the issue of inflation instead keeping his focus on the plans of Bank of England to help the economy continue to recover.

After recanting the speech, Archer added that he believes the base rate of the Bank of England will sit at 0.5% for the end of 2010 and the better part of 2011.


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