Bank of England raises base rate to 4% – what it means for savers

2023 started off with tough economic conditions for many people in the UK. The cost-of-living squeeze contributed to a fresh wave of strikes, and widespread unemployment continued to add stress to the labour market.

Today the Bank of England faced another base rate decision to tackle the crisis and reduce inflationary pressures. Despite a small fall in inflation, policymakers have chosen to increase the rate by 0.5% to 4% as expected – its tenth consecutive rise to date.


What does an increase in the base rate mean for savers?

Following a base rate rise, many banks and building societies pass on increases to their own savings products. It’s good news for savers as it means that the interest rate on their savings accounts or other financial products are likely to rise. This can result in greater returns on their assets, making it an excellent opportunity to grow their funds.


How to make the most of rising interest rates

  1. Consider long-term saving options. Fixed-term rates tend to offer higher rates but require you to lock in for a set period.

  2. Rebalance your savings portfolio. To optimise returns, consider investing a portion of your assets in higher-yielding savings products.

  3. Stay flexible. Monitor any changes in interest rates offered by different banks and be prepared to move your savings if a better option becomes available.


Why are prices so high?

Inflation has been running way above the target level for a while. The latest inflation figure was 10.5% in December 2022. According to the Office for National Statistics (ONS), annual food inflation hit a height of 16.9% back in December.

The factors affecting inflation remain consistent. A potent mix of soaring prices for energy and imported goods have played a large role since Covid and Russia’s invasion of Ukraine. UK businesses are also incurring extra costs and charging more for their products.

In today’s Monetary Policy Report, the Bank of England said they expect inflation to fall quickly this year, providing some relief for many households.


How Flagstone can help

We can help transform you into a conscious and active saver, so you can make the most of your money during these challenging economic times.

Our cash deposit platform provides savers with access to a wide range of accounts and interest rates from many different banks. Following a single application, savers can monitor interest rates and move money around when better ones become available.

Read this guide for more information on what a cash deposit platform is.


Open an account today


This article is not advice. If you would like to receive advice on your savings and investments, consider speaking to a Financial Adviser.



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