Bank of England Holds Firm on Interest rates

The Bank of England has decided to keep the benchmark UK interest rate at 0.25%, with it having been close to zero for a number of years.

This is despite strong calls for an increase, with The Telegraph reporting prior to the Bank of England announcement that its former Governor, Sir John Gieve, supports a “very strong case” for raising rates, referencing a lack of evidence for the economic slump post-Brexit.

What’s the situation?

Interest rates cannot remain this low forever, of course.

Bank of England Governor Mark Carney acknowledged earlier this summer that there might be a rise in rates, provided that the UK witnesses growth.

Ahead of the Bank’s decision to keep the UK interest rate at 0.25%, Mr Gieve believed that uncertainty surrounding the UK’s future relationship with the European Union was likely to weigh on growth for the next few years.

Many an analyst will also point to Brexit and the uncertainty over the UK economy as an illustration that significant growth may not be here for some time yet.

Whilst Mr Carney has not always been consistent when speculating a rise in interest rates, it is, nevertheless, sensible to assume that when the Bank of England speculate an interest rise of up to 1% by 2020, UK savers and mortgage owners should duly take note.

So, how can you still invest your money wisely and seek to make good returns with such low interest rates?

Cash savers should look beyond the big names

Rates are still low and when well known banks are offering undesirable rates.

Therefore, one should not avoid exploring lesser known names for stronger returns. For example, you may wish to seek out app-based banks or those offering higher rates to long-term customers.

Alternatively, shop around for exclusive new customer deals. It is also worth noting that less can often mean more when considering high returns, albeit on capped contributions.

Measured investments in a stocks and shares ISA

To those unimpressed by even the best interest rates for cash savers, alternative exist in stocks and shares or alternative investments.

Whilst most people will not have the time to learn the intricacies of financial investment, no one should be put off from making their money work through measured savings in a a product like a stocks and shares ISA.

Providing one properly diversifies across bonds, stocks, bullion and other dependable commodities, you are limiting your risk and making returns a cash saver can’t.

Despite the Bank of England claiming debt levels are still lower than 2008, they continue to argue that banks are exposed, highlighting the need for stronger reserves to absorb future shocks.

This consequently shows a wider concern that a credit bubble may be afoot. Couple this with uncertainty over an as yet unclassified Brexit, and the UK offers no respite for savers, along with problematic inflation levels as the impact of a weaker pound becomes clearer.

Courtney Lucas

When not feeding her 3 cats, Courtney writes about a variety of subjects, but mainly business and tech. She is interested in Fintech and the latest news regarding interest rates.