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Bank rate: low for at least one more year

By Matthew Plant

14 May2021

Bank Of England pictured at night The Bank of England's base rate is expected to stay low for another year at least, according to analysts IHS Global Insight. While it's good news for plenty of homeowners, savers won't be pleased.

A lot of people rely on the interest generated by money in their bank accounts, and they've lost out on a lot since the base rate was taken down to 0.5% in March 2009. Since then, the Save our Savers campaign claims, savers have lost out on a total of 102 billion.

So this latest prediction won't be welcomed by people hoping for a return to higher interest rates.

Looking ahead to the Bank's Quarterly Inflation Report, IHS says: '.we expect the Quarterly Inflation Report to indicate that interest rates are unlikely to rise from the current level of 0.50% until at least late 2013, and very possibly not until 2014.'

Looking back to 2008, the Bank's base rate stood at 5% at the start of October, but the Bank took it down to the all-time low of 0.5% over just five months. Even 5% isn't really high in historical terms - in 1979, it stood at 17%, and it was rarely out of double figures all the way through the 80s.

A high base rate basically encourages saving and discourages borrowing. These days, the Bank has to decide between 'punishing savers' by keeping it low - and raising it, which could make it even harder for the economy to recover.

Image iStockPhotos / Nina Matthews

Tags: Bank of England, bank, base rate, bank account, interest rates, economy, savings

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