On 30th November, six major central banks announced new measures to help liquidity in the global financial system. They want to avoid another recession should loans to struggling Eurozone banks dry up. The action is vital. Unfortunately, it means British savings account rates will remain low into 2012.
Simply put, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the US Federal Reserve and the Swiss National Bank promised cheaper short term US dollar loans to banks - cutting rates by ½%. A little cut counts for a lot when you are dealing in billions and trillions.
Banks are growing cautious again, just as they did after the collapse of Lehman Brothers. If they stop lending to each other, they also stop lending to us and businesses. Result: recession.
We’re not brainy economists, so cannot predict whether the Central Banks’ actions will help. Stock markets and commodity prices soared after the announcement, an indication that the global financial system welcomed the news at least. However many commentators considered the measures short term.
So where does it leave Savings Champion’s growing band of savings rate watchers?
The quick answer is ‘stuck where we are for now’. The Bank of England interest rate is still just 0.5%, a historical low. It has been the same since 2009 and is unlikely to increase until the economy recovers. When that will be is like asking how long is a piece of string.
The good news is that many savings accounts pay far more than 0.5%. Regular savers who are also HSBC account holders can get 8% per year from HSBC, although there are strings attached. While ISA savers wanting Easy Access can expect around 3% per year tax free from the best providers.
Check out our Best Buy tables or click on our free, unique Rate Tracker service to see if you can beat your existing savings rates. Don’t be scared, it’s really very easy, but we're also here to help if you get stuck (0845 4964).