The Bank of England has cut interest rates in an emergency move. It comes as fears continue over how the coronavirus pandemic will affect the UK economy.
Just over a week ago, interest rates were cut to 0.25% – now they are 0.1%, their lowest in history.
In a further move, in his first week in the job, Andrew Bailey increased its holdings of UK government and corporate bonds to 200bn meaning more money is pumped into the economy.
CEO and co-founder of Raisin UK, Kevin Mountford, has a wealth of experience in finance and is available to comment on the outcome of the move.
He has had this to say:
“Clearly with Covid-19 we are all facing unprecedented challenges and this is greatly impacting the global economy. As we see markets in free fall, Governments around the world have reacted to try and stabilise things and this was reflected in last week’s budget and since then further financial support has been announced to protect both businesses and consumers.
The UK banking sector is deemed to be more robust than it was back in 2007 however as far as savers are concerned then the new Term Funding Scheme and Countercyclical Capital Buffer will free up over £290bn in funding for banks to lend to businesses. This is money that banks might no longer need to attract from retail savers and this is significant as it represents around 11% of the £1.7tn UK savings market. Also with today’s news that the Bank of England interest rate was reduced from 0.25% to 0.1% and subsequently, we may start seeing savings rates being reduced across the board and although some easy access offers remain strong in most cases the recent rate reduction hasn’t been applied.
Although we all have plenty to think about we should not panic and equally avoid thinking that it isn’t worth saving …..shop around for better rates and if you can put some money aside, lock into fixed-rate products which tend to be higher – even if it’s in a short term fixed account or Notice Account. Remember also that for savings under £85k you are protected by the FSCS so even if the better rates are from banks you don’t recognise your money is protected.