Bank of England (BoE) short term interest rates are being held down so that the banks can borrow (from the BoE) for 0.5%, and then lend that money at >5% to the likes of you and me. Note: you cannot borrow from the BofE so you have to pay more to get money from the banks..
This process (see "yield curve" if you are interested!) gives the banks 'free money' to repair their balance sheets (they over-lent and now debts are going bad). They need profits to cover these losses for many years to come.
Despite the immorality of 'free money' for badly behaving banks - moral hazard - it is being done because no large bank can be allowed to fail ever again. There is a simple reason for this; and it is what spooked the financial system so much when Lehman Brothers died. The reason is Derivatives. Read up on them if you like at the Bank for International Settlements, but the nominal outstanding derivatives contracts in the world exceeded one Quadrillion dollars last year. Thats 20 times world GDP. A Quadrillion is 1000 Trillion. Thats "1000 million million" dollars. Mind bending, isn't it!?
Now why am I going on about derivatives? well, think of them like insurance contracts. But say you could buy fire insurance for your neighbours house. Now if you bought some, you have an incentive to go and set fire to your neighbours house. You'd have to be mad, but essentially that's what happened with Goldman Sachs and AIG.
Goldman took insurance against AIG dying and then promptly killed them by demanding huge collateral deposits on positions which AIG could not possibly meet.
The problem here is that the volume of the insurance contracts in existence exceeds the value of what's insured by many times over. Thus the payouts on the insurance would be so huge they would cause a domino effect, like a financial nuclear bomb going off.
Simply cashpoints would stop and the banks would be closed for an extended time. This has happened before in countries like Argentina (google "corralito")
The mechanism of holding the medium and longer term rates down is "quantitative easing" which has now paused in the UK, but will likely contiune once rates in the interbank area start to rise.
Rates have to be kept low to encourage inflation in asset prices. This has to happen because increasing asset prices will make the banks bad loans 'come good' as the homes in negative equity come back out. The problem is, inflation affects everything - you could find it costs £50 for a mars bar; and a £million for the average house!
So, essentially savers and pensioners will be paying to bail out feckless borrowers and loose lenders because interest rates will not keep pace with inflation. This, you must understand is the DESIRED effect. It's robbery.
I voted with my feet years ago and bought gold. It's still not too late.