The Bank’s cut to 4.25 per cent from 4.5 per cent marked the fourth in the past year, and more are expected, especially given concerns over how Donald Trump’s tariff war could affect UK growth.
Governor Andrew Bailey said he was “still of the view that the path, gradually and carefully, is downwards.”
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RBS and NatWest have both reduced rates on their fixed-term savings accounts by up to 0.33 per cent.
Those with an everyday saver account with Barclays will have seen their rate drop to 1.15 per cent in May.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Bank of England rate cuts are never going to fill savers with joy, but things may not be as bad as you think.
“For emergency savings in an easy-access savings account, it’s going to be important to keep an eye on your rate. Overall rates are falling, but some are still holding up far better than others.”
James Blower of the price comparison site The Savings Guru said: “The market expectation is that the base rate will head to 3.5 per cent by the end of the year so this is likely to spell the end of even 4 per cent interest rates, let alone the 5 per cent ones we have had until recently.
For those who cannot lock their money away for a year or more, there are similarly good deals on accounts where you give advance notice of any withdrawals.
Mr Blower said: “On £10,000, every percentage point difference is worth £100 in lost interest, so those tempted to think it is too much effort to switch – it isn’t. It often takes less than five minutes to open a new account with the best-paying providers – £100 for five minutes work is a good return.”
Best deals on savings accounts
Currently, the best one-year fixed deal is with Coniston Bank, which is offering 4.52 per cent.
Returns on savings tend to fall as the base rate does. Accounts will have rules and minimum deposit amounts. Check directly with providers before opening.
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