In a widely anticipated decision, the Bank of England’s Monetary Policy Committee (MPC) voted today to keep the base rate at its current level of 5.25%.
There was an 8 to 1 vote to maintain the base rate for the fifth consecutive time. Only one member of the MPC, Swati Dhingra, voted to decrease the base rate to 5%. For the first time since September 2021, no one voted for a rise.
Between December 2021 and August 2023, the MPC increased the base rate 14 consecutive times – from 0.1% to 5.25%. However, since August, they’ve held the base rate at 5.25%. This continues to be the highest rate we’ve seen for 16 years.
Andrew Bailey, the Governor of the Bank of England, previously said there have been “further encouraging signs that inflation is coming down” but the Bank would need more certainty that it was under control before it cuts rates.
Bailey hinted that cuts could be on the horizon, saying that the economy is “not yet at the point where we can cut interest rates, but things are moving in the right direction.”
Inflation forecast to fall below 2% within months
UK inflation fell to 3.4% in February, the lowest level seen since September 2021. According to data from the Office for National Statistics, the biggest downward contributions came from food, restaurants, and cafes.
The Bank of England recently said it expects inflation to fall back to its target of 2% between April and June this year, about 18 months earlier than previously forecast.
Whether that can be sustained is another question. In a survey canvassing the opinions of approximately 80 senior savings professionals at UK banks and building societies, almost half (48%) of respondents predicted inflation rising again in 2025.
How savers can make the most of high rates
Today’s announcement to hold the base rate at 5.25% means savers still have the chance to take advantage of the current high interest rates. Now’s the time to use this window of opportunity before the base rate is predicted to fall later this year.
Make your money work harder, by exploring competitive deals on savings accounts. If your money is currently sitting in an account earning little to no interest, there are many accounts offering rates above inflation. By securing rates that outpace inflation, your money will have more purchasing power.
How can Flagstone help you manage your savings?
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See how much interest you could be earning with Flagstone’s cash deposit calculator.
This article is not advice. If you would like to receive advice on your savings and investments, consider speaking to a Financial Adviser.
