Any savers angling for an early rate hike had their hopes dashed on Wednesday January 14 as it emerged that the two members of the Bank of England’s Monetary Policy Committee (MPC) who had repeatedly backed higher borrowing costs have changed their stance. Now, there’s a very real possibility that we won’t see any rate increases until early 2016 at least.

So what’s changed?

In a word: inflation. Or rather, the lack of it. A slump in international oil prices caused UK inflation to fall to a fourteen-year low of 0.5% in December. The figure was a long way from the Government’s target of 2%, forcing Governor Mark Carney to write a letter of explanation to the Chancellor.

Consumers could soon start to feel the effect, in the form of falling prices. While this is good news in the short term, it could have serious repercussions on the UK’s economic stability if it goes on too long. Analysts are already starting to speculate that the inflation number could test the minus figures over the coming months, before falling into outright deflation.

The latest MPC minutes show a united response from the Bank, as all members voted to keep interest rates unchanged this month and we saw unanimity for the first time since the summer. The two usual dissenters, Martin Weale and Ian McCafferty, dropped their regular call to increase borrowing costs on the concern that pushing rates higher now would enable the current below-target inflation to take hold.

It’s certainly not an unfounded concern. As interest rates go up, consumers have to pay back more interest on large borrowings such as mortgages, which leaves them with less money to spend. Similarly, the higher rates discourage further borrowing and encourage people to hold on to their assets in savings accounts. With less spending, the economy slows and inflation decreases.

In lieu of raised rates, the Bank is viewing oil’s falling price as a potential boost to the economy.  The idea is that lower oil prices will boost production and real incomes, acting as a stimulus to growth between the UK and its main European and global trading partners. It will certainly lower the cost of energy and transport, which will then help prices fall across the economy.

With this is mind, it’s indeed highly unlikely that the Bank will raise rates anytime soon. The first quarter of 2016 is looking like the likeliest target at the moment. And in the shorter term, it’s all but a given that the coalition Government will finish its entire term in office with interest rates sitting at their lowest level in history.

For consumers, that has many outcomes—some good, some bad. The low prices caused by slow inflation and low oil prices can be a big win, especially if wages start to see real growth. Whilst it favours those borrowing and spending, though, it causes problems for savers. It is also bad news for many planning a holiday this year, to the US in particular. The prospect of a rate rise in America – and vanishing chances of one in the UK – has led to a long run against the pound in favour of the dollar. Those wishing to travel across the Atlantic will find their pounds worth around 20 cents less now than six months ago.

So, if you’re planning a shopping spree sometime soon, this is great news, though if you’re saving up for a trip to the US then the cards may be stacked against you.

This information has been prepared by IG, a trading name of IG Markets Limited. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk.