THE Bank of England base rate decision is “irrelevant” with more than 70% of savings providers having already cut rates in 2026, meaning “irreversible damage” has been done to the market.
Since the start of the year, more than two thirds (70%) of savings providers have cut their rates, Moneyfacts analysis has found.
Year-on-year average rates across easy access and notice accounts have fallen, with the average easy access rate down from 2.92% to 2.42%, and the average easy access ISA rate down from 3.06% to 2.60%. The average notice account has fallen from 4.00% to 3.37% and the average notice ISA rate has fallen from 3.92% to 3.23%.
The Moneyfacts Average Savings Rate has fallen over the past 12 months to 3.31%, its lowest point since May 2023 (3.20%). The rate was last above 4% in January 2024 (4.04%). This means, overall, savers are losing money in real terms as inflation is higher.
There has already been irreversible damage done
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said: “Economists do not predict another Bank of England base rate cut until March or April, citing a weakening labour market and sticky inflation as the cause for a more cautious approach to rate setting. The UK is expecting subdued growth this year, and with the outlook for the economy looking fragile, it may be unsurprising to know that consumers are not feeling confident with their financial situation.”
She added: “Any delay in further interest rate cuts by the Bank of England is irrelevant, there has already been irreversible damage done to the savings market over the last 12 months. As inflation remains well above target, real returns on cash savings are weak and this can lead to a dangerous attitude of apathy.”
Cash rates are sliding
Philly Ponniah, Chartered Wealth Manager and Financial Coach at Philly Financial, said savers are getting a terrible deal.
She continued: “This data confirms what savers are already feeling. Cash rates are sliding and inflation is eating away at balances, even for people doing what they are told and shopping around. When the average easy access rate sits below inflation, cash stops being a safe place to grow money and becomes a parking space for short term needs.
“For savers, the key is intention. Keep enough cash for emergencies and known spending, but stop expecting savings accounts to provide any growth long term. Anyone with surplus cash should be looking at fixing for certainty, using tax wrappers like ISAs properly, or accepting some investment risk if the money is not needed for several years.
“Holding everything in easy access out of habit is now a guaranteed way to fall behind in real terms. On the base rate, a hold from the Bank of England looks very likely, but it genuinely does not matter for savers. The market has priced this in already.”
The economy is in the bin
Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said “the economy is in the bin”.
He added: “The Bank is holding rates today, Governor Andrew Bailey is cautious and the inflation data isn’t great. Rather than the decision, the markets will want to see the commentary that comes alongside it as, for some reason, the Bank of England still has some credibility with the markets.
“The economy is in the bin, and even stubborn inflation shouldn’t distract the bankers from lowering rates.”
