Bank of England cuts rates: impact on savers explained
- The Bank of England held interest rates at 5% on September 19, 2024, after a cut from 5.25% in August.
- Experts suggest that savers should secure the best deals now, as further cuts are expected to impact easy access accounts.
- Consumers are encouraged to review their savings options and switch providers if necessary to avoid low rates.
On September 19, 2024, the Bank of England's Monetary Policy Committee decided to maintain the interest rate at 5%, following a previous cut from 5.25% in August. This decision was influenced by signs of cooling inflation and comes after a series of 14 rate increases from December 2021 to August 2023, which had previously improved returns for savers. The next meeting to discuss interest rates is scheduled for November 7, 2024, with expectations of potential cuts due to the Federal Exchange's recent reduction of its lending rate to 4.75%. Experts have expressed mixed feelings about the implications of these rate decisions for savers. Mark Hicks from Hargreaves Lansdown noted that while the current rate stability is beneficial, future cuts could negatively impact easy access savings accounts, which are more sensitive to changes in the Bank Rate. He emphasized that fixed-rate savings accounts remain a better option for those who can afford to lock in their funds. Myron Jobson from interactive investor urged savers to act quickly to secure favorable savings deals before rates decline further. Will Davies from Ford Money advised consumers to reassess their savings accounts and consider switching providers if they are receiving low rates. Despite the anticipated decline in interest earnings, savers should remain aware of the Personal Savings Allowance (PSA) and its tax implications, which may vary based on individual circumstances and could change in the future.