Following today’s Bank of England decision to hike interest rates, Giles Hutson, CEO of Insignis Cash Solutions, comments on what this means for savers:
“The Bank of England’s decision to hike rates for the first time in 10 years is a healthy reminder that low interest rates can’t last forever. The increase of 0.25% will start to release the UK from its unsustainable low rate environment, and help avoid a consumer finance bubble. Increasing rates now reminds society that a low rate climate is not indefinite. This will support better long term financial planning, especially when it comes to deciding how much debt a family or company can afford to take on.
“The benefits of a low rate climate had a limited life and couldn’t last forever. Savers’ cash deposit returns have been obliterated. That said, this is one small step to normalisation and a single rate rise of 0.25% won’t revolutionise saving in the short term. We need to see two major shifts to boost returns in any meaningful way; continued increased competition in the banking market and overcoming the inertia that holds savers back from managing their cash more actively.”