BGN Entrepreneur » Interest rate cut

The State of Savings

Sky — Thu, 26 Mar 2009 16:58:05 +0000

The threat of redundancy and a difficult mortgage market mean that a lot of people are feeling the needs to save more money. however, with Bank of England base rates chopped to 0.5%, the accessible savings landscape looks bleak at the very first glance. More than 40 savings providers have reduced their own interest rates by an avergae 0.5% ever since the beginning of March, bringing the average variable savings rate down to 1.08%.
The good news is there are some decent rates available but savers will need to turn to the internet or be prepared to accept a raft of rules, regulations and restrictions to benefit. Many of the best paying accounts now demand either large or regular deposits, or require savers to abide by tough withdrawal rules. Short-term bonuses are also being used to boost headline rates which then fall to a lower level when the time is up.
Another option is to choose a regular savings account if you can afford to put cash away every month.

Bank May Begin Printing Money to Reverse Downturn

Sky — Wed, 11 Feb 2009 19:05:49 +0000

Bank of England drastically cut its forecast for UK’s economy in 2009, predicting a further shrink at an annual pace of as much as 4% during the summer, which will be more than twice as bad as its assessment last November. A deep recession is also expects to drag on for most of the year.
The Bank cut the interest rate by 0.5% point to an historic low of 1% this month. However, the impact of cuts on interest rate were blunted by the credit crunch as banks failed to pass on the full benefit to all customers.
Today, the Governor of the Bank of England gave a strong signal that under a strategy of quantitative easing, the Bank will start “printing money” as soon as next month. The Bank underlined its determination to keep inflation at the 2% target, raising expectations that the Bank’s rate-setting committee may be preparing to use its new powers of quantitative easing to help to boost UK’s economy.

How to Save Money to Beat Recession

Sky — Thu, 22 Jan 2009 17:47:11 +0000

Two weeks have past ever since the Bank of England cut the base rate to a record low of 1.5%, leaving lots of savers struggling to earn a return on their cash.
The average rate on an instant easy access account stands at 1.46% on a balance of £1000. Nearly 50 savings accounts on the market pays just 0.1% interest. In spite of some new accounts launching this week, the outlook remains bleak.
Although the consumer price inflation sharply dropped to 3.1%, there are very few savings accounts now offering a real return to taxpayers even at this lower rate. The accounts paying the lowest amounts of interest include the Halifax variable rate Isa, which pays 0.61% interest, as well as Nationwide’s Cashbuilder account paying only 0.1% interest.
Money saved in a Isa is not subject to tax, so interest of more than 3.1% outstrips inflation. However, outside a tax-free savings account one has to earn more to get a real return. A higher-rate taxpayer requires a gross return of 5.17% now to prevent the value of their savings from dropping, while a basic rate taxpayer requires 3.88%.

Further Interest Rate Cut

Sky — Thu, 08 Jan 2009 16:13:41 +0000

Today, the Bank of England ordered another half-point cut in interest rates, as it kept up its aggressive campaign to breathe life into the stalled economy. The move amid soaring fears over Britain’s rapidly worsening prospects following a deluge of dire economic news and a mounting toll of job losses, brings the interest rate down to all-time low of 1.5%, which is lowest in 314 years.
However, for the struggling businesses and fearful workers and consumers, who were hoping for a more radical cut by another full percentage point or more, this move will be disappointing. Warnings have been given in the recent days that the economy will suffer its worst year since 1946 and shrink by more than 2.5% over 2009.
This year is going to difficult.