The Bank of England Monetary Policy Committee (MPC) has voted to keep interest rates at their lowest level for the 28th time.
Since the Bank Rate was lowered to 0.50 per cent in March 2009 the MPC has decided to maintain that level for the official interest rate as the UK experienced a recession and now a sluggish recovery.
The Bank Rate, the rate at which the Bank lends to banks and other financial institutions, affects the rates available on savings accounts and mortgages.
The decision, announced on 7 July, also left the Asset Purchase programme, which was designed to help boost the financial system in 2009, unchanged at its existing level.
While a low Bank Rate has benefitted many homeowners by keeping mortgage repayment levels low, savers have seen their rates of return take a hit.
The campaign group Saver Our Savers is one of the organisations and commentators calling for a rate rise because of inflation, which is at 4.5 per cent (CPI).
However, as the Bank Rate can take time to affect inflation levels the MPC is resisting a rate rise believing the level of inflation will start to fall next year.
Fixed rate bonds
For savers unwilling to lock their savings away for too long, shorter term fixed rate bonds have proved popular.
The Yorkshire Building Society’s Fixed Rate Bond: 1 Year pays 3.50 per cent AER fixed for a year.
The Post Office 2 Year Online Bond, meanwhile, offers a figure closer to the official rate of inflation at 3.96 per cent AER fixed for two years.
On longer tem fixed rate bonds, interest rates over four per cent are available.
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