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No "insurmountable technical obstacles" to prevent 0% interest rates

It does not appear that it would be impossible for the base rate of interest to fall to zero per cent in the UK, it has been suggested.

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18 December 2008

No "insurmountable technical obstacles" to prevent 0% interest rates

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In news which could potentially benefit credit card customers, Jonathan Loynes, chief European economist at Capital Economics, states: "From what we can understand it certainly could happen in the UK.

"There doesn't seem to be any insurmountable technical obstacles to interest rates falling to zero."

However, he adds whether this is something that happens or not is another matter, suggesting the Bank of England's monetary policy committee (MPC) appears "anxious" to lower interest rates down to very low levels in a short period time.

But whether it wants to go all the way to zero or not is uncertain, Mr Loynes states suggesting it may turn its attention to matter such as monetary loosening after the rate reaches one per cent.

The MPC is due to make its next decision regarding the base rate of interest on January 8th 2009.

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