Bank of England could cut base rate, meaning bad news for savers

2 August 2012

Posted by Kim Bardsley

The Bank of England base rate has been at a record low on 0.5 per cent since March 2009 as a result of the recession, but it has been suggested that this could be cut even further.

A meeting of the Monetary Policy Committee is due today (August 2nd) and the International Monetary fund has advised that it thinks the interest rate should fall to 0.25 per cent.

Although a group of economists polled by Reuters all believe it will stay at current levels, it may be that the bank acts amid poor GDP figures.

People may be encouraged to take out more mortgages if the interest on them is so low, but it also means bad news for savers whose money is already earning very little.

Which?'s latest Quarterly Consumer Report found that Britons are currently only saving seven pence out of every pound of income, which could drop to five pence by 2016.

However, this will make it harder to build up a safety net for essentials like food and home heating oil, so the organisation recommends looking for accounts that pay the best returns and then budgeting carefully.

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