by Insignis Cash Solutions in Industry Perspective
Inflation has declined further and currently stands at 1.3%. While this mitigates the damage done to savings earning less than this level, we still work on the basis of a long-term inflation assumption of 2%.
Banks tend to react to the rate change reasonably quickly. As well as the speculation surrounding the decision, we have seen a handful of rate adjustments by banks in the run up to the decision.
Savings and deposit rates are not only correlated to the bank of England base rate and, regardless of the rate decision, competition within the banking industry is also helping to maintain rates above inflation, especially for notice accounts and 1-year term deposits. With inflation-beating rates we are in a perfect position to mitigate this degradation factor for clients too.
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