The Bank of England's Governor, Mervyn King, also said that he expects inflation to fall further in the coming months. Against this backdrop, the Base rate looks set to remain at its current level, of 0.5% for the foreseeable future.
But what does all this mean for you?
Savings
In theory, a low base rate environment spells bad news for savers. The interest paid on savings is heavily influenced by the base rate, so last year, when rates were as high as 5%, savers could see returns of as much as 6%.
Now the base rate has fallen, rates have fallen too. The average instant access account is paying just 0.15%, according to the Bank of England. However, banks and building societies are still desperate for our cash because of the ongoing shortage of funds on the wholesale markets - they therefore need money from savers to lend out to borrowers.
As a result, the leading savings rates are paying significantly more than the average instant access rate. If you have money languishing in a poor-paying account you should therefore look to move it to an account paying a better rate. Egg's Savings Account, for example is paying 3.25%, although this includes a 12-month bonus of 2.0% so you should look to move your money again when that ends.
For more information on the latest savings rates, visit our savings channel.
Mortgages
Nothing is happening quite as you'd expect in this recession. Usually, continued low base rates are great news for people trying to find mortgages as the cost of borrowing is also low.
Although that's true for anyone who's already got a variable rate mortgage, because they'll have benefited from a reduction in their monthly payments as a result of the recent interest rate cuts. However, it's a different story for those looking to take out a mortgage now.
The cost of mortgages has risen significantly since the onset of the credit crunch. This has been caused partly by the shortage of funds, but falling house prices and a rise in the number of people defaulting on their mortgage payments mean lenders are much more cautious about what they'll lend.
The Bank of England has pumped billions of pounds into the economy in an attempt to get banks lending again and bring the cost of borrowing down, but mortgage rates have continued to climb - particularly fixed rates.
If your mortgage is coming to an end, you may be wondering whether to move to a fixed rate or tracker next. The base rate is so low that most analysts agree its next move will be upward.
That might sound like this is a good time to fix but it's worth giving this some thought. Today's inflation figures mean the base rate is unlikely to move upwards for the time being, so switching to a tracker and taking advantage of the base rate could be the cheapest option.
Having said that, a tracker is always a gamble as the rate could go up, so give careful thought to how you'd manage if that happened before you move your mortgage.
For more on this read our article, 'The mortgage conundrum - fix or tracker?'.
What can I do?
It also came out today that unemployment is at a 14-year high. Many people are facing the prospect of redundancy and then trying to find a job in a difficult market. For people with families, mortgages and bills to meet, this can be a trying time.
Act now to sort out your finances. Aim to have some savings in place to act as a buffer if you do lose your job; if you're in debt then repay what you can and try to find a cheaper deal; consider a mortgage protection policy to protect your home even if you lose your job.
Read our article 'Been made redundant? Here's what to do' for some further advice.
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