Savings goals have undoubtedly taken a hit as a result of the pandemic, which has now lasted over a year. Towards the start of the outbreak, the Bank of England took the decision to reduce its base rate to 0.1 percent - the lowest in its history. This had a knock on effect for high street providers, meaning Britons have not been able to secure the higher rates they were perhaps used to.
Subsequently, the central bank has kept its base rate at 0.1 percent in reviews which have taken place since.
However, there are now signals that as Britain emerges from the pandemic interest rates could, too, be resurrected.
Bank of England policymaker Gertjan Vlieghe today stated the central bank is likely to start raising interest rates in the future.
This, the Monetary Policy Committee member said, is likely to take place “well into” next year.
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Speaking at a lecture held at the University of Bath, he said: “In that scenario, the first rise in Bank Rate is likely to become appropriate only well into next year, with some modest further tightening thereafter.”
Recently, another Bank of England official made comments about the future of interest rates.
Michael Saunders, who also serves as an external member of the Monetary Policy Committee, outlined his view on the matter.
On Monday, he appeared to suggest an interest rate rise is around the corner, and may take place in the next 18 months.
An increase to interest rates is likely to be good news for those who are hoping to grow their cash, and make sure it does not lose value in real terms.
Regardless of interest rates, though, bank and building society account saving is usually considered the safest way to build funds as many accounts are protected should the worst happen.
Previously, there had been speculation the central bank could introduce negative interest rates.
In 2020, Bank of England governor, Andrew Bailey, suggested this was a measure which was “in the toolbox”.
Negative interest rates have been applied, albeit with varying success, in a number of countries across the world.
However, it is never a technique which has been deployed within the UK’s economy.
It is thought negative interest rates could stimulate the economy by creating an incentive to spend rather than to save.
But with the prospect of interest rate rises on the horizon, it seems this possibility is now less likely.
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