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Loan Protection: Interest rates set to 'stay low' in 2011

Interest rates are set to stay low throughout 2011, according to a financial expert.

Michael Baxter, editor of financial website, expressed his belief that the Bank of England is unlikely to increase rates in the near future as there is little inflation pressure.

He said: "People might say that the rate of interest needs to go up because inflation is high, but that's irrelevant. If the rate of interest goes up because inflation is high because of commodity prices, than an increase in rates would do nothing."

However, he stated that issues surrounding interest rate rises relate strongly to the problems in Ireland.

"If markets start questioning whether or not government debt is safe, and if there is a history of the government defaulting, then that could push interest rates and markets up," he added.

At the latest Monetary Policy Committee (MPC) meeting, the base rate was left unchanged at 0.5 per cent for the 21st month in a row.

Earlier this month, Reuters conducted a poll of leading economists which predicted that the first rate rise is unlikely to take place until October 2011, with rates set to hit 0.75 per cent.

Posted by Charles Baker

Charles is a reputed financial analyst with almost decades of experience under his beltADNFCR-2776-ID-800318786-ADNFCR

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