Laura Suter, personal finance analyst at investment platform AJ Bell, comments on the latest decision by the Bank of England:
“While rumours of zero or even negative interest rates had been swirling ahead of today’s meeting, it seemed unlikely the Bank would choose now to make any move on rates. After slashing them twice in March to a record low it makes sense that the Bank wants to keep something in its back pocket as we see how the economic climate evolves when we emerge from lockdown and the crisis. Instead it has chosen to expand its Government bond buying in order to help the economy recover from the devastating effects of the Coronavirus crisis.
“The news that Base Rate will stay at 0.1% coupled with the further drop in inflation to 0.5% in May is some small relief to savers, who have seen rates cut across the board but at least aren’t being pummelled by inflation too. The flood of people saving money in lockdown together with record low Base Rate means finding a decent savings rate is like trying to find loo roll at the start of the crisis – pretty tricky.
“Marcus by Goldman Sachs, which has been the darling of the saving market since launching in the UK and having consistently market-leading rates, has pulled out of the market after such an influx of new customers, leaving a hole for savers.
“We are now in the rare situation where the Government-backed NS&I is offering the market-leading east-access savings rate. But even here savers have been frustrated as the sheer volume of new customers, coupled with the restrictions on the organisation of working from home, mean many report long waits to open accounts or speak to customer service.
“For many savers the prospect of being able to earn just over 1% on their savings isn’t enough of an incentive to shift their money to a new account, no matter how much spare time they might find themselves with in lockdown. But with most accounts paying just 0.1% or less, it’s worth switching to give your hard-earned savings a small boost.”
