The Bank of England (BoE) kept the base rate at 0.1 percent today as it announced it was keeping rates low to support households and businesses. The central bank noted vaccines are now helping the UK economy recover rapidly.
The BoE was relatively optimistic for the UKs performance going forward, as it predicted: "In the Monetary Policy Committee’s (MPC’s) central forecasts, global GDP recovers in the near term as vaccination programmes lead to the easing of Covid‑related restrictions on activity, although the outlook varies across regions.
"UK GDP recovers strongly over 2021 to pre‑Covid levels as restrictions are loosened.
"Demand growth is boosted by a decline in health risks and a fall in uncertainty, as well as announced fiscal and monetary stimulus.
"Further out, the pace of GDP growth slows as the boost from these factors wanes."
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"Already it seems as though this strategy is building momentum as recent Bank of England figures show that mortgage borrowing reached record highs and UK households have repaid more bank loans than they have taken out.
“However, despite this, many will have grimaced at the thought of continual low rates.
"Cash could be sitting idly in saving accounts for a while, so staunch savers and those nearing pension age should start to look for alternative investments to reap more satisfactory rewards.”
Andy Russell, the CEO of Wealthify also warned savers may struggle to find inflation beating accounts: “The current climate is tough on savers. It’s been over a year since the Bank of England set the record low interest rate of 0.1 percent and many people are still stuck in cash savings accounts that are failing to beat the rate of inflation. With rates remaining painfully low, it is advisable to balance having instant access to a rainy day fund with investing to meet longer term financial goals."
Additionally, Jason Cozens, the Founder and CEO of Glint, commented on the ever present issue of negative rates.
He said: "Many will be beginning to feel as though another month without negative interest rates is simply putting off the inevitable.
"Savers have been forced into a search for value as they're punished by a perfect storm of historically low interest rates, inflation rising more quickly than forecast, record levels of borrowing and continued quantitative easing - all these factors collude to ensure that our cash and savings erode in value by the day.
"It's no wonder that consumers are increasingly searching for alternatives - the surge in the value of many alternative currencies and cryptos over the last month indicates that the tide is turning away from government-backed money.
"The alternatives, like cryptos and gold, are strengthening their position in the mainstream as consumers want more control over how they spend and save their money and, in many cases, simply no longer trust central banks to have their best interests at heart."
"Of course, it's unlikely that central banks and regulators will allow the unfettered rise of cryptos to continue - in fact, we've already seen the beginnings of a crypto crackdown with the launch of the new Central Bank Digital Currency (CBDC) taskforce.
"This is the clearest sign yet that a UK CBDC is incoming, but it is vital that consumers realise that although this is a digital currency, as it is tied to the value of sterling, its value is prone to erode in the same manner as cash.
"This in turn impacts purchasing power. Whilst the emergence of CBDCs may push cryptos out of mainstream use, consumers will keep searching for alternatives to protect their wealth - for example, through Glint, gold can be used as everyday money through our app and card in over 200 countries, although the value of gold can decline, it has proven to have stood the test of time and many believe has held its value over the long-term."
On inflation, the BoE noted it expected it to rise closer to its two percent target later in the year.
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