Everything advisers and savers need to know about the cash market right now

The last month brought speculation and anticipation amongst savers with many holding out for a base rate rise from the Bank of England. Here’s a quick recap.


Inflation is on the up

Yesterday the Bureau of Labor Statistics published the US consumer price index showing a sharp increase to 6.2% in October from a year ago – the highest in 31 years and the fastest annual pace since 1990. The data indicates that supply chain disruptions and inflationary pressures are more intense than expected.

It’s likely that other economies will feel the knock-on effect from the US. With UK inflation forecasted to average 4% in 2022, savers will look to minimise the impact by moving cash into higher interest baring accounts.


Interest rates are expected to rise

The Bank of England may have stuck to the 0.1% base rate for now, but with the next Monetary Policy Committee meeting in December, there is confidence in a rate hike on the horizon. Higher interest rates will soon be needed to control inflation and keep the UK economy on track. Savers should get ready to take advantage of the best rates around.


Savings balances reached record high

Our partner bank, Paragon analysed CACI data that finds UK savings balances reached record highs in October despite the fixed rate market share continuing to shrink. This is reflective of Flagstone’s platform insights as last month also saw the highest number of deposits to date. A rising trend in cash deposits suggests savers are becoming more incentivised by the growing interest rates.


NS&I Green Savings Bond launched with disappointing rate

Ahead of COP26, NS&I launched its Green Savings Bond which plans to finance the government’s spending on sustainable projects within the next two years such as renewable energy and cleaner transport. But at a sub-standard interest rate of 0.65% on a three-year fixed bond, it is far from competitive. Such a low-paying rate has resulted in no effect on the general level of savings products in the market.


Speak to us today to find out how we can help you or your client manage their cash portfolio.


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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