The Bank of England held interest rates at 0.5% for the 30th consecutive month on Thursday, leaving investors pondering strategies to see them through what is expected to be an extended period of low economic growth.
The decision to maintain the record-low base rate had been predicted, particularly after last month’s unanimous vote to hold.
So now the greater concern is how likely we are to see further quantitative easing.
Asset purchases were held at their current level of £200 billion at Thursday’s meeting of of the Monetary Policy Committee (MPC), but the release of the minutes in a fortnight will reveal if any other members have joined Adam Posen’s persistent call for more stimulus.
Nida Ali, economic adviser to the Ernst & Young ITEM club, said: "A darkening of growth prospects on the back of weakness, both on the domestic and international front, has raised the chances of more QE.
"While the case for this isn’t strong enough yet, it has certainly gone from being a back up to a genuine possibility."
Interest rates are now not expected to rise until the first quarter of 2013 and with prospects for returns on cash limited investors are potentially ignoring their risk profile in pursuit of income.
Darius McDermott, managing director of Chelsea Financial Services, said: "It is really tough looking for low-risk, decent returns at the moment. Gilts are the first port of call, but gilt yields are so low right now because of their safe haven appeal."
Clients that would usually stick their funds in a cash ISA are looking towards equity-based products in order to beat inflation.
"They are putting their capital at risk to try and supplement their income," McDermott added.
Strategic Bond funds and Equity Income funds are some of the most popular products for these clients.
But some are even going so far as to look to Global Income funds.
"While it hasn’t been a deluge, we have definitely seen a reasonable increase of monies going from cash ISAs to equity ISAs, and that is at a time when stock markes have had a difficult period."
The worry is that if the base rate and subsequently cash ISA rates remain depressed, investors will ramp up the risk-taking even further and look towards Asia for income.
This concern could prove even more relevant if UK companies start to cut dividend payments because of the slow economic growth rate.
Elsewhere, the European Central Bank (ECB) held interest rates at 1.5% and its President Jean-Claude Trichet said rate cuts were likely to happen towards the end of 2011 or beginning of 2012.
Back in April the ECB hiked interest rates from 1% to 1.25% and in July it put them up a further 0.25%.
Since then the slowdown in both core and peripheral eurozone countries has prompted the central bank to change tack.
