Bad news for savers as Bank of England holds interest rates
THE BANK of England has kept interest rates on hold this month despite rising inflation.
The Bank’s monetary policy committee (MPC) held the base rate at 0.5 per cent on Thursday, following an increase in November – the first rate hike in a decade.
Angus Dent, chief executive of peer-to-peer lender ArchOver, warned that households would suffer due to the Bank’s caution.
“This decision ends 2017 on a damp squib,” Dent said.
“The Bank of England’s approach is too slow. We need a bolder approach to monetary policy in the new year.
“Rather than playing wait-and-see, the Bank should emulate the US Federal Reserve and use interest rates as a tool to combat the growth in inflation currently squeezing British incomes.
“At a time of low wage growth, UK households need a funding boost. It’s clear that 2018 is going to be a rocky road for the UK economy as we navigate the final stages of Brexit.”
He said investors and savers need to take matters into their own hands.
“Instead of waiting for the Bank to hand them better returns, they need to take the initiative and look for high-yield investment options themselves,” Dent added.
“As governor Mark Carney continues to tread gingerly, individuals need to broaden their portfolios to make sure they’re making the most of their money.”
Calum Bennie, saving expert at Scottish Friendly, said savers were still waiting for last month’s increase to feed through into many cash savings rates.
“With inflation running at its highest level for nearly six years and rail and food price increases likely in January, consumers will have to play the cards they have been dealt wisely in the coming months as the squeeze on income continues,” Bennie said.
But other analysts were pleased by the Bank’s lack of movement.
“Inflation may have hit a near six-year high, it’s clear that now is not the time for a further rate rise,” Nancy Curtin, chief investment officer at Close Brothers Asset Management, said.
“Even last month’s decision may have been too hasty given the strain the economy is under, and we certainly don’t expect further moves from the MPC in the short-term.
“Employment may still be near a record high, but wage growth continues to lag inflation, which will limit consumer spending.”
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