Savings and pensions experts have been urging the Bank of England to begin raising interest rates soon in order to protect savers.
The base rate has remained at a record low of just 0.5 per cent since March 2009. As a result, anyone looking for a savings account has struggled to find one that pays out a decent rate of interest. In addition, pensioners have found themselves lacking the income from their savings that they may have been relying on before retirement.
Inflation is the key reason that savers have had such a hard time in the past year and a half. The cost of living has grown while the interest being paid on the money they keep at the bank has been low, leaving them worse off in many cases. This gives little incentive for people to save and may lead to a gap in the amount of money people are saving for their pensions.
Pensions expert Dr Ros Altmann says that now is the right time for the Bank to start increasing rates. She said, "Rates were brought down to these levels as an 'emergency' measure to stave off potential deflation, but they have not been returned to more appropriate levels, despite the emergency situation having long since passed."
