Base rate to remain at 0.5% until 2011

With the Bank of England again deciding to keep base rate at an all time low of 0.5%, many economists, including Lloyds Banking Group, are predicting base rate being kept at this level until late 2010 or even 2011.

"Today’s announcement by the Bank of England to keep base rate on hold marks a year since rates moved to 0.5%," said Paul Spencer Agricultural Director for the Agricultural Mortgage Corporation (AMC). "Farmers could be forgiven for assuming that a decision to stay on a variable rate – as opposed to fixing - would be the right one.

"Much depends on what happens to the wider economy and in particular inflation once the election is out of the way. Fixed rates remain at relatively low levels for the time being but may start to edge up as soon as a stronger recovery looks likely. It is therefore worthwhile considering all options available to ensure they match the circumstances of individual businesses."