Over 60 economists polled by Reuters last week expect rates to stay unchanged, while most of them don’t ever see a rise until well into next year.

Budget cuts as well as job losses will limit wage increases and consumer spending for years to come. Two other factors which have pushed inflation up over the past six months, rising oil prices and weaker sterling, have gone into reverse in recent weeks.

Andrew Sentance, Monetary Policy Committee member, believes there still needs to be some gradual monetary control. Due to Britain’s emergency Budget, he is an advocate for making sure the Committee is doing its job to fight off inflation and make sure there is not a stall in recovery. To that end, he voted last month to raise the rate to 0.75 per cent up from the low rate of 0.5 per cent. He was the one policymaker to do so, and even though he didn’t have anyone join him in the vote, he gained a small measure of support with his view.

Nonetheless, most economists believe it will be a long time before there is any major rise in interest rates, let alone through the next few months.

"While there is clearly the possibility of a token interest rate hike before the end of the year if inflation provides further upside surprises... we still believe it is more likely than not that the Bank of England will keep interest rates down at 0.5 per cent through 2010," said Howard Archer of the IHS Global Insight.

Since lending rates are directly tied to interest rates set by the Bank of England, this is very encouraging news for first time homeowners and those seeking remortgage.