Interest rates in the UK are to be maintained at a record low of 0.5% for another month, the Bank of England has announced.
At the same time, the Bank’s quantitative easing plan was also left unchanged at £375m following a meeting of Bank officials.
Governor Mark Carney has hinted that rates could increase later this year or in the early part of next, but these alterations are not being rushed through.
Any potential rise is expected to be small but it will still impact upon households – potentially putting costs up and raising mortgage payments.
Changes expected – but not for a while
Last month, Mr Carney revealed that rate increases would be “gradual and limited” and also hinted that rates could reach 2.5% by 2017.
Such increases would certainly depend on the state of the economy and predictions are made based on continual and consistent levels of growth in the next three years.
Rates of 1.25% by the end of 2015, 2% a year later and finally 3% by the end of 2017 could be possible, but there is no level of certainty as to when any changes will occur.
As a result it remains incredibly important for people across the UK to carefully manage their finances so that the effects of any potential rises will not be as striking.
No need to rush a decision
Chief economist at the British Chambers of Commerce backed the decision not to rush into a change, adding that a “clear and consistent message” was required in order to “sustain business confidence”.
“The risks from raising rates prematurely are much greater than the risks of waiting a little longer,” he added.
Growth in the UK economy was recorded at 0.8% for the first quarter of 2014, marking a fifth straight quarter of growth, boosting confidence and stimulating further growth in the process.
The situation is certainly improving with unemployment also down to 6.6% in the three months until May, and there is little pressure to raise rates to stifle inflation, as that also remains low.
Despite the positivity there remains a need to carefully manage incomes and outgoings as product costs continue to fluctuate.
One such way of managing this is to use a prepaid card for everyday spending, as it can help to budget effectively.
A prepaid card limits spending to the amount on the card at any given moment and is not directly linked to a bank account, making funds safer.
The cards can easily be topped up or replaced if required, while accounts can be checked regularly online if necessary.