On 20th June Mark Carney made a bold statement in his annual Mansion House speech that now is NOT the time to raise interest rates.
But barely a week later at the ECB Forum on Central Banking on 28th June, he appears to have changed his mind!
In a Telegraph article that day, Neil Wilson of ETX Capital is quoted as saying “Coming off the back of the 5-3 split at the last meeting and hawkish comments from the Bank’s chief economist Andy Haldane, it’s the clearest signal yet that the Bank is minded to tighten.
There is a sense the MPC may wish to ‘correct’ its rate cut last summer in light of the surprisingly resilient UK economy and rising inflation, which is accelerating quicker than the Bank expected”
The fact is that no one knows when the Bank of England is going to raise the base rate and I apologise if I sound like a stuck record, but the fact is that savings rates have been moving independently of any base rate decision for some time now.
Of course, an increase should see all providers raise rates across the board, as they dropped them when the base rate fell to 0.25% in August last year. But really this will mostly benefit those who are languishing in dreadful savings accounts with the high street banks, waiting for that rise to happen.
But, as most of you will probably know if you are regular readers of our communications, you don’t have to wait for the base rate to rise if you want to improve your interest now!
I’ll say it again, what a difference a week makes.
The battle of the best buy tables has continued unabated. And this week we’ve seen a new easy access account paying 1.25% gross/AER burst onto the scenes. In the fixed rate bond arena, rates have continued to shoot up. And let’s not forget the Sharia Fixed Term Deposits, which are still outstripping the best fixed rate bonds. More details of all of these accounts can be found in the Rates Rundown.
So, amongst the doom and gloom, this year is proving to be a breath of fresh air for active savers. Whilst 29% of easy access accounts are earning 0.10% or less, you can earn more than 12 and half times more by shopping around!
Since the end of last year, the best easy access rate available has risen by 25% and fixed rate bonds have risen even more. One and two year fixed rate bonds are up by 32% and three year bonds are up by 38%. Long may it continue – even if the Bank of England doesn’t help us, at least the Challenger Banks are.