Interest rates held at 3.75% but Bank warns Iran war could mean future hike

The Bank of England has kept interest rates at 3.75 per cent.

Katie Horne, banks relationship manager at Flagstone, said: “MoneyFacts’ September figures tell us that the savings options available to individuals and businesses alike have never been greater and a sustained 3.75 per cent base rate helps ensure a bumper proportion of savings accounts can offer savers inflation-beating returns.

“The breadth of options available right now gives savers and businesses much-needed time and space to choose the best savings accounts for their individual needs, and ensure their funds are adequately diversified and spread out for maximum income potential and minimum risk.

“Savers should remember that many banks and building societies will have priced in the expectation of a base rate hold into the returns they are offering.

“This means that while savings rates won’t necessarily rise in the short term, they are less likely to fall. This keeps competition among savings providers high, creating a buoyant market for savers.

“However, another vote to hold the base rate steady doesn’t help individuals and companies that are struggling with a double-whammy of economic challenges: high living costs at home and high business costs at work. Another base rate hold won’t encourage banks to lower mortgage rates nor reduce the cost of personal and business loans.

“A base rate hold may go some way to help curb inflation, which is something to be grateful for as we roll into Autumn on a tide of surging energy costs.

“At home and at work, energy is not a discretionary cost. We have no choice but to heat (or cool) our homes, run our cars, and cook food for our families.

“With the cost of oil sitting comfortably above $100 a barrel, soaring energy prices in the run-up to winter will pile fresh financial pressure on British households.”