The Bank of England’s Monetary Policy Committee pegs the interest rates at 0.5% for the 26^th time which is no surprise.

With the current economic situation more doubts are surfacing as to the stability of the economy and possible recovery as consumers have voted with apprehension to spend as retailers show a definite slowing down of retail sales across all sectors.

All sectors are reporting a static situation and stagnant sales across, manufacturing, services and construction on a continued decline.

All the evidence is pointing towards avoiding any rise in interest rates as consumers keep their wallets firmly in their pockets and handbags and avoidance of unnecessary purchases with essentials such as food maintaining the essential purchases. Luxury food brands are losing out to budget meals as supermarkets fight for the consumers shopping spend with giveaway loss leaders in a hope to win over new consumers and keep existing ones.

Employees and unions are generally not prepared to rock the boat by asking for unreasonable or excessive wage demands at least in most industries as they witness their employers struggle to maintain cash flow and orders.

It is hoped that with most people keeping a status quo and holding off its being proposed that inflation will drop back of its own accord, that’s the theory anyway. Furthermore, there is the risk that a rise in interest rates would effectively stifle any potential recovery, tipping the UK back into recession.

So it’s no surprise that the MPC’s latest decision was announced and was immediately welcomed by business leaders and came as a relief to mortgage borrowers on variable rates who can do without any more pressure on their finances. Mounting pressure will continue on lenders to come up with more competitive deals to stimulate the market and entice borrowers with incentives and it is apparent that some fixed-rates are already becoming cheaper. There could be fresh options for borrowers to slightly improve upon their existing deal – considering additional borrowing when they remortgage.

The Bank Rate low rate in itself is a sign that the UK economy is still very fragile and has even been referred by the CBI as an ‘Emergency’ rate and a change to more typical interest rates would in itself be a sign of better times and a recovery. Such a change and trend towards a more relaxed and less delicate economy would also stimulate lenders to gradually relax some of their lending criteria and get money flowing instead of dripping to something nearer the scale of lending but not wreck less lending which is gone and hopefully for good.

Borrowers who remain optimistic about the economic recovery may feel more secure opting for a fixed-rate deal. The CBI has predicted an increase in rates later this year.