The Bank of England’s Monetary Policy Committee (MPC) yesterday, 31 October, voted unanimously to maintain its base rate at 0.75%.
Commenting on the decision, Momentum UK head of investment management James Klempster said: “We’re being told that the era of low interest rates is finally coming to an end, but in reality, the Bank of England will be extremely reluctant to squeeze an economy already struggling to grow in the lead up to Brexit.
“It will be a long time before interest rates exceed inflation and until this happens, people with cash in savings accounts will continue to lose money in real terms and effectively become poorer.”
Klempster highlighted that low interest rates can be combatted by “making your money work for you” through investments.
“There is a misperception that investing is highly complicated and risky, but in its simplest form, it’s about setting clear life goals, targeting investment outcomes that satisfy these goals and ensuring that your money can grow at the right pace to meet them,” he concluded.
stepstoinvesting.com head Simon Longfellow echoed this message, stating: “As interest rates remain unchanged at 0.75%, consumers will continue to make feeble returns from their savings. While new entrants to the Banking market, like Marcus, attempt to woo new customers with an introductory rate of 1.5%, the reality is that the real return still lags way behind inflation.”
He emphasised that UK savers last year witnessed the purchasing power of their money plummet by a staggering £30.3bn, the equivalent to £1,147 per household.
“An alternative to consider would be investing, with more education around the benefits and risk involved, consumers will be more aware of higher yielding alternatives.”
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