CEBR says base rate stable at 0.5% until 2012

Following the emergency budget, the Centre for Economics and Business Research (CEBR) predicts that interest rates will remain stable at 0.5% until the end of 2012.

Douglas McWIlliams, chief executive of CEBR, says: “The chancellor noted Mervyn King’s remark at the Mansion House dinner that if growth was slower interest rates would be lower.

“We agree and – with our lower growth forecast we now think that base rates will be stable at 0.5% until the end of 2012 and the 10 year bond yield will fall to 3%. With base rates lower for longer, we also expect mortgage rates to fall from around 4% at present to 3% by early next year.”

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