Interest rates could remain low for the foreseeable future, according to a senior Bank of England official.
Deputy governor for monetary policy Ben Broadbent said that “rates are likely to stay low for some time yet,” and suggested that this could become a new paradigm.
Mr Broadbent said that the downward shift in rates could be “secular”, pointing out that the underlying rate of interest, as opposed to the rate set by central banks, has been declining for some years.
Meanwhile falling inflation has led some analysts to believe that rates may not rise at all for some months.
It was announced earlier this month that inflation has fallen to 1.2 per cent – its lowest level in half a decade.
Renewed fears about the Eurozone crisis have also led commentators to suggest that the Bank will avoid a hike in the short term.
Analysts had previously predicted a rate rise during the final part of this year, but it is now thought that the Bank of England’s Monetary Policy Committee could now choose to keep the base rate at its historic low of 0.5 per cent well into 2015.