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05/01/10
Will rates for savers rise in 2010?

Whether savings rates rise or not is likely to depend on what happens to the Bank of England base rate.

It is almost impossible to make a realistic prediction as to what will happen to the base rate in 2010. There are encouraging signs to suggest the UK could have come out of recession in the final quarter of 2009. If this proves to be the case, the chance of a rate rise is more likely, although any recovery is predicted to be fragile by most analysts.

Some economic experts believe base rate could stay at 0.5% for the majority, if not all, of 2010. The average forecast of economists polled by Reuters in October 2009 was for the MPC to hold the bank rate at 0.5% until at least July 2010. Rates were then predicted to rise to 0.75% by September and 1.0% by the end of 2010.

The Centre for Economics and Business Research has predicted the rate would remain at the record low of 0.5% until at least 2011 and will stay below 2% until 2014.

Whether the base rate rises or remains at it's current level, it is reasonable to suggest fixed rate bonds are likely to continue to lead the way on savings, followed by notice accounts and the best buy instant access accounts.