Ross Leckridge, associate director at Johnston Carmichael Wealth, also does not anticipate any immediate improvement: “As interest rates begin to rise you would assume there would be a subsequent rise in rates on offer from the banks.
"However, as the BoE has noted, interest rates are going to rise slowly over time, which is likely to delay any subsequent increases from the banks.”
Scott Gallacher, director and chartered financial planner at Rowley Turton, takes a similar view: “While rates on savings seem to have improved a little recently, they are still significantly below inflation.
"Governments still seem keen to prop up economies, and the markets, with cheap money. So, I do not see saving rates rising significantly for the time being.”
This is being felt keenly by those with cash to spare, as Patrick Christie, graduate trainee financial planner at WealthFlow, says: “The high inflation, low interest environment means that anyone holding cash beyond their expenditure needs is losing money in real terms, that is, their capital’s purchasing power. The loss is equal to the difference between the given interest rate and inflation.
“Interest rates have resulted in cash accounts that lag drastically behind inflation, causing losses in real terms to consumers.”
Christie does not expect banks to make any significant moves, as he adds: “If interest rates do increase, the banks would probably have to respond. Whether this response is enough to make holding cash a viable long-term investment remains highly doubtful.”
In the meantime, people need to find the best savings rate they can get, says Savings Champion's Bowes.
“An increase in the BoE base rate, although expected to be small initially, could signal the end to a decade of low interest that has decimated savers’ hard-earned cash – even more so as inflation has continued to rise.
“However, even if the BoE increases the base rate, this doesn’t mean that the rates on all savings accounts will rise.
"And even those that do may well fall short of increasing in line with the base rate. So it’s really important that people know what they are earning, and that they switch to something better if they are not being offered a fair deal.
"The better the interest earned, the more this will mitigate the damaging effects of inflation, although as things are at the moment, this will not eradicate it.”
Fiona Nicolson is acting deputy features editor at FTAdviser
