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When can savers expect base rates to rise?

Even though we have seen an increase, at least in the short term, in savings rates in the UK it is unlikely we will see any further significant rises until UK base rates start to increase. However, UK savers will be dismayed to learn that the Bank of England fully expects UK base rates to remain at 0.5% for the foreseeable future as the fight against inflation and the ongoing attempt to refloat the UK economy continues.

As ever, it seems as though UK savers are literally at the bottom of the pile and last on the list of those in need of help from the UK government. The last couple of months had seen a significant spike in the UK savings rates as many UK banks looked to attract as much money as possible. It seems as though UK money market are still very difficult and suffering from a lack of liquidity, although unfortunately this spike in interest rates did not last too long!

When you consider that headline inflation is 1.6% in the UK and the UK base rate is 0.5%, with many savings rates at or around this level, a number of uncompetitive savings accounts will actually see funds reducing in real terms because of the higher rate of inflation.

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