Is it possible for interest rates to go lower?

The simple answer is yes, but how?

If you think about a plumber who turns up to your house, they usually bring a bag of tools, gadgets, and 'things' with them to fix the problem you called them out for. Usually, they pull out a wrench, obviously give sharp intake of breath to confirm it's going to be a problem, weave their magic and the problem is solved.

The Monetary Policy Committee (MPC) of the Bank of England are also fixers, but in their case, it is the UK economy - as it occasionally springs a leak - that needs sorting out. They too have a range of tools available to them that they can use to control the flow of money through the piping of the UK financial system. Normally, their Wrench might be a steady control of interest rates (held again in August 2020 at 0.1%), with the objective of controlling inflation at around 2.0% each year.

Problem is, these as we all know are not normal times, and inflation is not running at 2.0%. It's 0.8% pa (Consumer Prices Index Household June 2020, or CPIH to its friends) and the Governor of the Bank of England has to write letters to the Chancellor to say why they are off course. More on these example letters illustrating some use of the tools of control at their disposal can be found here, noting that this problem is not going away anytime soon:

So, our friends at the MPC are working hard to control the economy quickly in very difficult waters (deliberate pun intended), and they are now reaching deep into their tool bag to stop the economic leaks. And one thing they can do, which admittedly is extreme, is to send interest rates negative.

What would this mean to the average consumer? Well, likely that you will get very little interest on any savings you have, and you might find any variable rate mortgage cost going down. Good for some and not for others.

There is much to think about at the moment, and money planning might be down the list a bit. But now is the time to pay attention. Make sure any savings or debts are doing all they can against the backdrop of the significant upheaval and change of 2020.