UK Interest rates have been cut as expected by the Bank of England to just 0.25pc the lowest the rate has been since 2009.
Announced today the Bank of England will also purchase government bonds and corporate bonds in an attempt to stimulate the UK economy.
While the cut will be good news for borrowers the cut will impact the most on savers who have already suffered over the years.
Susan Hannums, Director at Independent Savings Adviser SavingsChampion.co.uk says
“Just when you think it can’t get any worse for savers, it has.”
“We would argue that providers no longer need a change to the base rate to cut savings rates but we suspect most providers to take full advantage.”
“Before the decision was even announced, almost 120 savings accounts were set to see their rates cut between now and the end of the year, but now we expect things to accelerate.”
“Over the last four years, every month thousands of savers have suffered with almost 5,000 existing savings rate cuts since Funding for Lending was introduced. To many savers, even with a change in the base rate, it probably won’t feel much different.”
“Worse still is many savings accounts couldn’t even suffer a quarter point cut. With almost a third of easy access accounts currently paying 0.25pc or less, savers need to act now to better their returns.”
“By leaving money languishing in these accounts, they are playing directly into the providers’ hands.”
“Although we don’t expect to see much reaction from the providers immediately, by the end of the month or the beginning of September, the floodgates could open.”
Further cuts to interest rates could follow later in the year with some experts saying that the interest rates could fall to just above 0pc as the financial powers try to stimulate the UK economy.