Small businesses warned over interest rates

Date: 7th September 2010

the Bank of England's interest rate in expected to remain at its historic low for the rest of the year.

Last month the Bank's Monetary Policy Committee (MPC) voted to keep the interest rate at 0.5 per cent and financial planning firm Informed Choice believes it is unlikely to change this year.

Martin Bamford, the organisation's chartered financial planner, said: "We expect the MPC to maintain the Bank Rate at 0.5 per cent for at least the rest of this year. It would be a big surprise to see a rate hike now."

The expert warned that this means there is a "real danger" that the cost of borrowing could increase.

"We might see some short-term inflation spikes, particularly when VAT goes up to 20 per cent in January, although a lot of the inflation we see in the UK is imported so interest rate changes here will do little to control it," he added.

Posted by Jacob Williams