Moneywise users expect base rate to remain at 0.25% for foreseeable future
Four in 10 (40%) Moneywise.co.uk users expect the base rate still to be at 0.25% this time next year, according to our latest poll result.
The Bank of England’s base rate was cut from 0.5% to 0.25% on 4 August. It’s the first time the base rate has changed since March 2009, when it dropped from 1% to 0.5%.
The hope is a drop in base rate will encourage spending, which will give the economy a boost. This is because a reduction in interest rates makes saving less attractive and borrowing more attractive, which stimulates spending.
But it’s bad news for savers as it’ll likely mean savings rates plummet even further, because banks can borrow money from the Bank of England extremely cheaply, which in turn means they don’t have to fight for your deposits by competing with each other.
Whether the base rate will rise or fall remains to be seen, but a further 25% of users who voted in our poll, which ran between 16 and 23 August and received 1,035 votes, expect base rate to fall below 0.25% - but to remain in positive territory.
Just 8% expect base rate to turn negative by August 2017.
The remaining voters expect the base rate to rise - 18% expect the base rate to return to 0.5% by this time next year, while 9% predict it will rise above 0.5%.
See the pie chart below for the full results (Click to enlarge).
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.