The Bank of England did not back down from raising interest rates to a new 15-year high today despite signs that UK inflation is finally starting to drop. Although they did slow down the pace.

What’s new?

In today’s Monetary Policy Committee (MPC) meeting, members were split, with six voting to temper the increase to 25 basis points. Two members favoured a repeat approach of 50 basis points while one backed a result of no change. After a quick tally, the Bank of England has now lifted the base rate to 5.25%.

With the Bank earlier indicating that they would keep a close eye on labour market conditions, trajectory of wage growth, and inflation of service pricing, it comes as no surprise to see further tightening in the monetary policy. In other words, an increase to the base rate was highly anticipated.

But as usual, there were deliberations aplenty in the weeks leading up to today’s meeting, with new inflation data at the core of the conversation. We already knew the UK was in sky high territory for interest rates, and inflation was much of the same. However, the latest release of figures from the Office of National Statistics (ONS) presented a much more promising picture, restoring hopes that finally we’re throttling down on inflation. June’s data saw consumer price inflation ease to 7.9%, down from 8.7% in May, but still well above the Bank’s target of 2%.

Although inflation is heading in the right direction, wages are still proving to be a sticking point. According to ONS labour market statistics, regular pay increased by 7.3% between March and May, compared to the same period last year. This represents the greatest increase rate for regular pay, which was also observed last month. According to the Bank of England it also suggests that ‘risks from more persistent inflationary pressures may have begun to crystallise.’

Making the most of rising rates

Following this announcement, we should see other banks pass on higher rates. If you hold cash in the bank, rising rates gives you an opportunity to increase your interest income. And by doing so, you can also mitigate some of the inflation pressures you might be facing.

Bank applications and forms are often a chore, so many choose to stick with the same low-interest savings account. But cash deposit platforms, like Flagstone, mean you now don’t need to settle for less. With just one application and password, you can access a wide selection of new rates, savings accounts, and banks on the market – so you can move your money as soon as you see a better rate arise.

See how much you could be earning on Flagstone with our cash deposit calculator.

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