LONDON (ShareCast) - Comments made by Monetary Policy Committee member Kate Barker suggest UK interest rates are unlikely to rise until well into next year.
In an interview with the Leicester Mercury newspaper, Barker accepted there was
plenty of concern about whether the recent pick-up in the economy will last much past the summer.
"Our present view is that we think rates could stay low for quite some time," said Barker, central bank policymaker since 2001.
"The really important question is (whether) there's a pick up in the economy and if people can sustain that so it continues on to autumn."
Interest rates have plummeted since last October, down to an historic low of 0.5%, where they've been since March.
The Bank has also embarked upon a programme of quantitative easing, which experts say could pass the £150bn originally set aside for the plan. It's already spent £125bn.
Howard Archer, chief UK economist at IHS Global Insight, thinks Barker's comments complement those made earlier this week by fellow MPC (A050540.KQ - news) member, Paul Tucker.
"Together, they reinforce our belief that interest rates will stay at 0.50% deep into 2010 and that quantitative easing will be further extended," Archer says.
Despite this, homeowners have been warned to expect the cost of fixed rate mortgages to increase in line with an increase in swap rates.
"Yesterday we saw another sharp rise in swap rates, following closely on from other recent increases," said Ray Boulger at mortgage broker John Charcol.
"The scale of the increase was large enough to be the straw that breaks the camel's back and as a result I expect several lenders to increase the cost of at least some of their fixed rate mortgages over the next few days."
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