At the same time, the MPC is keeping their asset purchase programme (QE) at £200bn.

This is the 21st month that rates have remained on hold at 0.5%.

Whilst price inflation remains above the government target, with CPI inflation at 3.2% for the year to October, we do not expect to see any interest rate rises until at least the middle of next year.

Savers will need to consider this latest announcement and the impact it continues to have on the interest they receive on their cash savings. It is good news for those with mortgages that are linked to the Bank Rate.

Andrew Lilico, chief economist at the Policy Exchange, has said that the Bank of England may be forced into dramatically increasing the Bank Rate due to rapidly rising inflation.

His research note also says that the UK is likely to suffer from a double dip recession, followed by a boom, driven by huge monetary growth.

The forecast of excessive price inflation, which would need to be brought under control with much higher interest rates, is based on the fact that the Bank of England has already pumped £200bn into the economy in the form of Quantitative Easing (QE).

The impact of higher inflation, and higher interest rates, increasing mortgage repayments will then (initially) push inflation up even higher. Dr Lilico is predicting inflation at around 10%.

He is sensible enough to point out that, unless households take action now to significantly reduce their debts, interest rates at 8% could result in mass mortgage defaults. This could prompt policy makers to keep interest rates lower for longer, and then inflation could hit 20% as it did in the 1970s.

So, how much attention should borrowers and savers pay to these interest rate predictions?

His predictions seem to go against the consensus opinion of other economists. Whilst there remains a great deal of uncertainty about the future direction of the UK economy, the balance of probabilities point to us avoiding a double-dip recession, inflation remaining slightly higher than the government target for a while and interest rates remaining very low.

The predictions from Andrew Lilico are based on a number of factors and forecasts all converging to create a ‘perfect storm’ for interest rates.

Whilst we feel it is extremely unlikely that interest rates will reach these sorts of levels by 2012, borrowers should take note of his sensible advice to reduce household debt whilst rates remain low.

Over a year the FTSE 100 has risen from 4,505.40 (1,028.84 points or 22.84%).

£1 is currently worth $1.60250 US or €1.11160 Euros.

Brent Crude Oil Future is currently priced at $81.55/barrel. Gold is $1,126.75/ounce and Silver is $18.12/ounce.

The UK Bank Rate is 0.5% and CPI inflation was 1.9% for the year to November 2009.

The index has risen from 4,434.20 since the start of 2009, a rise of 978.68 points or 22.07%.

£1 is currently worth $1.617 US or €1.1278 Euros.

Brent Crude Oil Future is currently priced at $78.00/barrel. Gold is $1,104.00/ounce and Silver is $16.99/ounce.

The UK Bank Rate is 0.5% and CPI inflation was 1.9% for the year to November 2009.

The index has risen from 4,434.20 since the start of 2009, a rise of 762.61 points or 17.2%. Over a year the FTSE 100 has risen from 4,330.70 (866.11 points or 20.0%).

£1 is currently worth $1.60770 US or €1.12520 Euros.

Brent Crude Oil Future is currently priced at $73.65/barrel. Gold is $1,104.50/ounce and Silver is $17.31/ounce.

The UK Bank Rate is 0.5% and CPI inflation was 1.9% for the year to November 2009.

The index has risen from 4,434.20 since the start of 2009, a rise of 827.37 points or 18.66%. Over a year the FTSE 100 has risen from 4,388.70 (872.87 points or 19.89%).

£1 is currently worth $1.62520 US or €1.11170 Euros.

Brent Crude Oil Future is currently priced at $71.81/barrel. Gold is $1,124.00/ounce and Silver is $17.51/ounce.

The UK Bank Rate is 0.5% and CPI inflation was 1.5% for the year to October 2009.

The index has risen from 4,434.20 since the start of 2009, a rise of 888.16 points or 20.03%. Over a year the FTSE 100 has risen from 4,163.60 (1,158.76 points or 27.84%).

£1 is currently worth $1.6523 US or €1.1100 Euros.

Brent Crude Oil Future is currently priced at $77.87/barrel. Gold is $1,203.25/ounce and Silver is $19.11/ounce.

The UK Bank Rate is 0.5% and CPI inflation was 1.5% for the year to October 2009.

The index has risen from 4,434.20 since the start of 2009, a rise of 811.53 points or 18.3%. Over a year the FTSE 100 has risen from 4,226.10 (1,019.63 points or 24.13%).

£1 is currently worth $1.6475 US or €1.1014 Euros.

Brent Crude Oil Future is currently priced at $77.10/barrel. Gold is $1,166.50/ounce and Silver is $17.98/ounce.

The UK Bank Rate is 0.5% and CPI inflation was 1.5% for the year to October 2009.