The canny freelance contractor who has been careful with their contractor finances may be disappointed by a prediction concerning future monetary policy. Those with savings who were hoping to finally see an improved return on their nest eggs are unlikely to have much to celebrate about, one leading expert has suggested.
Alan Young, who is senior adviser to the Ernst & Young ITEM Club, was commenting on the likely decisions of the Bank of England’s Monetary Policy Committee (MPC), which is scheduled to meet later this month. There is little prospect that the MPC will alter the decision it has sustained for several meetings now, namely, holding the Bank’s interest rate at its historically low 0.5 per cent.
Mr Young explained that the Committee will have seen no substantial change in the economic data concerning the previous month, and is therefore most unlikely to do anything other than to maintain a “steady as she goes” approach. But perhaps most significant of all is that the next three to four years will see some eye-watering fiscal tightening. Mr Young believes that this will be so severe that the MPC has little option but to keep monetary policy as loose as it can, in order to offset the potentially dampening effects on the economy of the tightening policy.
So, your savings aren’t going to acquire much in the way of interest in the foreseeable future, but the low rate may help keep you in employment. At least the mortgage repayments aren’t likely to start soaring in the near future.
