Expectations of a 2019 interest rate hike from the Bank of England (BoE) are currently at their lowest level, at under 5 per cent, Hargreaves Lansdown revealed.

In comparison, at the beginning of March, markets had priced in a 50 per cent chance of a rate increase.

However, the chance of an interest rate cut in 2019 now sits at 10 per cent, double the probability assigned to an interest rate hike. Despite this, a majority of the market now think the overwhelming likelihood is that there will be no movement in rates this year.

Commenting, Hargreaves Lansdown senior analyst Laith Khalaf said: “It’s that time of year when April Fools’ gags come out in force, and cash savers may be forgiven for thinking the joke’s on them. Markets are now almost totally discounting the possibility of a 2019 rate hike, whereas just a month ago, it was priced in as a fifty-fifty chance.

“Indeed markets now think it’s more likely we’ll get a rate cut this year than a rate rise, though they are overwhelmingly pricing in the probability that rates will in fact just stay the same.

“The ongoing Brexit drama has of course helped to dash hopes for an interest rate rise, but so have concerns over the global economy. In recent weeks some pretty poor economic data from the Eurozone, combined with a dose of caution from the US central bank, have dampened expectations for global growth, and so for potential interest rate rises too.”

If the UK were to leave the EU in an orderly fashion, the BoE would be granted more leeway to increase interest rates, whereas a no-deal Brexit would, in theory, result in looser monetary policy, Hargreaves Lansdown added. The bank has already warned that rates could move in either direction in the event of a disorderly exit, stating that it will make the necessary decision to protect the pound.

Beyond Brexit, the health of the global economy also plays a role in the Bank of England’s thinking, and if the outlook starts to look weaker, that will also play a part in the decision to tighten or loosen policy, or indeed leave it largely unchanged, which has been the preference since 2009.

“Those who are looking to stick their money away for the long term should consider investing it in the stock market. Indeed since ISAs were launched in 1999, investors would need to have achieved a cash interest rate significantly above bank base rate to match returns from the stock market.

“For those who might need access to their money in the short term, cash still remains the most appropriate option. While savers can’t control monetary policy, they can shop around for the best rates, which are usually found outside the UK’s high street banks. They can also consider fixing for a period to boost returns.

"And while rates may be staying lower for longer than expected, they will rise at some point, at which stage the tax benefits of wrapping these savings in an ISA will become more obvious,” Khalaf said.

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