BoE figures show savings rates at record lows

by Gill Montia

Story link: BoE figures show savings rates at record lows

Latest figures from the Bank of England show that average interest rates on branch-based instant access and notice accounts have fallen to record lows.

In January, branch-based notice accounts paid an average 0.29%, down from 0.9% in December and 3.9% in January 2008.

Rates on branch-based instant access accounts fell to an average 0.51% last month, compared with 2.77% a year earlier and the average rate on cash ISA stood at 1.38%, down from 5.06% in January 2008.

January marked the fifth consecutive monthly fall in the base rate, which has been cut aggressively since October.

Prime Minister Gordon Brown has promised action for savers, many of whom are dependent upon savings returns to supplement their retirement incomes.

However, they are likely to have to wait until April to see their plight eased, most probably through tax cuts on income from savings.

Some analysts are continuing to predict that the base rate will hit zero in the early part of this year amid efforts to slow the recession but recent rate reductions have been seen very much as a double-edged sword.

While savers suffer, lenders reliant on money market rates to fund their businesses maintain that interest rate cuts alone cannot restore the flow of credit to individuals and businesses.