As inflation continues its downward spiral, savers may be encouraged as more savings accounts now make a real return when taking into account tax and inflation. However, with inflation seemingly under control, the Bank of England is now under less pressure to increase interest rates.
Mark Carney has already suggested that even when the base rate does rise it will remain modest and won’t be increasing to pre-crisis levels. The fact however, is that the lack of competition in the market has had a bigger impact on savings rates in recent years than the drop in the Bank of England base rate, so focusing on a base rate rise could be a bit of red herring.
What is important now and always is that savers shop around and move your money to better your returns. At least now savers can choose from up to 64 Cash ISAs that match or beat inflation compared to a low of just one single Cash ISA in August last year and even that came with a catch (a high minimum).
Although things seem on the surface to be improving, falling inflation may be a double-edged sword for savers.