Bank of England holds base rate

Those struggling to manage their debt will have breathed a sigh of relief yesterday, as the Bank of England decided to maintain base interest rates at 0.5 per cent.

However, the Bank's Monetary Policy Committee did vote to halt its controversial programme of quantitative easing with an option to continue at a later stage.

The decision comes after speculation that rates may be raised due to spiralling inflation.

It will come as a relief to those with large amounts of debt. However, many analysts are warning that debt problems could increase dramatically when rates are eventually lifted.

Kevin Still, director of EuroDebt, said that the hold will enable some to continue to clear debts".

Meanwhile, for those reliant on mortgage rates remaining low, he said that "it will provide a reprieve before their disposable income becomes squeezed to a point where they can't met contractual payments on their credit agreements".

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[cpldebtguru]

Ten of thousands of borrowers are sitting on a debt timebomb when interest rates go up. It will be interesting to see if the current debt relief measures will be so prominent when we are 'technically' out of recession!