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Lone voice calls for interest rate rise

Lone voice calls for interest rate rise

Category: Savings

Updated: 20/10/2010
First Published: 20/10/2010

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 It is now over 6 months old so the content may be out of date.

One member of the Bank of England's Monetary Policy Committee remains adamant that interest rates should be increased with immediate effect.

Savers have been desperately wanting interest rates to start rising ever since they first slumped to a record low of 0.5% back in March 2009.

As the Bank's interest rate hit almost rock bottom, so too did the rates that banks and building societies have been rewarding savers with on their savings accounts.

However, the minutes from the October meeting of the MPC have revealed that Andrew Sentence once again voted for a rise in interest rates to 0.75%, the fifth month in a row that he has taken such a stance.

Unfortunately, he was the sole voice amongst the committee which called for a rise, with all eight other members opting to keep rates where they are.

The only other member of the committee to make a small stand was Adam Posen, who agreed with the majority that interest rates should stay unchanged, but stood alone in wanting to see quantitative easing (QE) increased beyond its current level.

Mr Posen voted for a further £50 billion to be spent by the Treasury in order to help stimulate the economy, a move which would have taken the total amount spent on QE to £250 billion.

Although the task facing savers looking for a decent rate of return on their savings accounts is not an easy one, it is by no means an impossible challenge.

A savings account such as NatWest's e-Savings currently pays 2.89% and lets you withdraw your money whenever you need it.

Alternatively, it is worth considering that higher rates of interest are available if you're willing and able to put your money away for a certain length of time.

Such savings accounts might not be ideal if you want instant access to your money, but they will help you to build up a bigger savings pot in a faster amount of time.

Barnsley Building Society's Online Fixed Rate ISA, for instance, pays 3.00% if you're able to leave your money untouched for 12 months.

If you can live without your money for a little longer, Chelsea Building Society's Fixed Rate e-ISA account will pay 3.25% for investing your money for a two year term.

Even better is SAGA's Three Year Fixed Rate Savings account which pays 4.00%.

Find the best savings rates for you - Compare savings accounts

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.