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Bank member votes for rate rise to no avail

Bank member votes for rate rise to no avail

Category: Economy

Updated: 18/08/2010
First Published: 18/08/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

A member of the Bank of England's Monetary Policy Committee (MPC) voted to increase interest rates for the third month in a row earlier this month.

As was the case in June and July, Andrew Sentence voted for a rise of 0.25% in the base rate of interest at the MPC's monthly meeting.

He was out voted by the other eight members of the committee, however, meaning the measure was frozen at the historic low of 0.5%, where it has stood since March 2009.

The combination of continually low interest rates and high inflation - yesterday's figures showed a marginal fall to 3.1% in the Consumer Prices Index, still way above the Government's target of 2% - means savers face a struggle to find a decent return on their money.

Some people have called for interest rates to rise in the face of such stubbornly high inflation, although the British Chambers of Commerce warned against such a move yesterday.

It is thought that a rise in interest rates could increase the chance of a double dip recession.

However, amid all the doom and gloom, the good news for savers is that there are still accounts out there which will offer a decent return on investments.

If you'd prefer instant access to your money, Halifax offers a rate of 2.60% on balances of just £1 or more with its Web Saver Extra.

If you're comfortable with putting your money away, then ICICI Bank UK offers a short term bond that pays a rate of 3.10% on minimum investments of £1,000.

For those that don't want to invest quite so much, Northern Rock offers an only slightly smaller rate of 3.00% on a minimum investment of just £1 on its one year fixed rate bond, and you can always top your balance up as it allows additions.

For top returns, a market leading 4.75% rate is available from ICICI Bank on balances of £1,000 or more, although investors must put their money away for five years

If a tax efficient savings vehicle is more to your tastes, the Nationwide e-ISA offers a rate of 2.65%, with the added bonus that withdrawals are allowed.(requires FlexAccount)

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.