The Bank of England, raises the base rate again. A further 0.75% to 3.00%. This follows the European Central Bank and US Federal Reserve, raising their rates by a further 0.75%.
What’s happening with the current savings rates:
Bank of England:
- The Bank of England as expected have raised interest rates by 0.75% to 3.00%. This is the eighth consecutive rate rise and the largest rate hike since 1989, pushing borrowing costs to their highest since late 2008. The move is to combat inflation, which is at a 40 year high, while a recession is underway.
European Central Bank:
- The ECB raised its base rate by a further 0.75%, following a similar move in September. Borrowing costs are their highest level since early 2009 as the Eurozone faces high inflation and the prospect of a recession. This move was as expected, with further base rate rises anticipated in the coming months. The annual inflation rate for the Euro Area hit 9.9% in September, well above its target 2.00%.
The US Federal Reserve:
- The Federal Reserve has also increased interest rates by 0.75% in a bid to tackle inflation. This is its sixth consecutive rate hike and fourth consecutive 0.75% increase, pushing borrowing costs up to a new high since 2008. This decision was in line with market expectations. Officials, signaled a smaller rate hike in December, stating that when deciding on further increases they will consider the cumulative tightening of monetary policy, the lags with which monetary policy affects the economy and inflation, and further financial and economic developments. However, the Chair Jerome Powell noted during a press conference that ultimately the level of interest rates will be higher than expected.
What does this mean for savings rates?
As increase in all three base rates is only good news for savers, with commercial banks likely to pass on these rate rises to Clients. Meaning that Clients can expect high returns from Sterling, Euro and Dollar deposits.
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