What it means for markets
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “Given that storms threaten to whip across the global economy, policymakers have opted not to rock the boat and are keeping rates on hold as they assess risks on the horizon. Like the Fed, the Bank of England has opted for a ‘wait and see’ policy given the uncertainty. Pay growth remains strong, with vacancies rising and so there is concern that inflation will stay stubborn - it's forecast to rise to 3.75% in the third quarter of this year before falling back - just as the economy has gone into reverse. Stagflation has reared its head and does not look like it’s going to back away soon, which is set to keep decision making difficult.
But concerns about growth may soon start to outweigh worries about sticky prices. The job of policymakers is to look further ahead and try to assess how economic forces will impact consumer prices down the line. Although the UK may appear to be an island cut off from further tariff threats for now, it won’t be isolated from the turmoil given that its trading relationships stretch right across the world. This means that downwards pressure on prices may well filter through sooner rather than later. So, while borrowers are going to have to dig in with more patience, it’s not likely to be long before further cuts land, with May looking increasingly likely.”
What it means for savings
Mark Hicks, head of Active Savings, Hargreaves Lansdown: “This is good news for savers, who can expect to enjoy another month of robust rates as we head towards the end of the tax year. It’s not just that rates are on hold this month, but when we do get cuts - possibly later this spring – they’re likely to be few and far between. This year the market is only pricing in one in May or June, then another around September. It's why there are such great rates sticking around, with the best fixed savings deals hanging on above 4.5% and the best easy access at 4.75%. Competition in the cash ISA market also remains impressive, so you can still get 5% on easy access savings – if you’re prepared to live with a very short-term bonus. It means rich pickings as the deadline approaches to take advantage of your ISA allowance.
The hold on rates doesn’t mean you can afford to do nothing. Rates might not be moving fast, but they’re on their way down. If your easy access rate has fallen, it is worth shopping around for a better deal with online banks and savings platforms. And if you have cash that you won’t need for a year or more, it’s well worth considering fixing them while these deals are still around.”
What it means for annuities
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown: “An interest rate hold spells good news for the annuity market. Interest rates are one factor determining rates and this is why we have seen incomes soar in recent years. A 65-year-old with £100,000 can currently get up to £7,585 per year from a single life level annuity according to HL’s annuity search engine. This is close to an all-time high. It’s seen the annuity market step out of the shadows and take centre stage with more retirees looking at whether now is the time to take the plunge and fix a guaranteed income for life.
It's important to do your research though. Once bought, an annuity cannot be unwound and if you make a mistake you could be left regretting it for years to come. Different providers offer different rates so don’t just accept the first quote, use an annuity search engine to see what the market can offer you. Also be aware of what you need the annuity to do. If you need it to supply an income to a spouse or rise in line with inflation over time then there are options for that though your income will be lower. Taking the time to see what’s out there will make sure you get an annuity best suited to your needs.”
What it means for resilience
Sarah Coles, head of personal finance, Hargreaves Lansdown: “No news isn’t good news for mortgage holders, who’ll need to wait longer for cuts. The slightly better news is that fixed rates have inched down in recent weeks. And while we’re not expecting anything significant in the immediate future, overall rates are expected to trend downwards over time. The HL Savings & Resilience Barometer shows that mortgage payments tend to rise with income, so the top 10% of earners have average monthly payments of £1,322 and have the most to gain from this trend.
Short-term movements are hard to predict at a time when there’s so much uncertainty in the global economy. So rather than trying to second guess what Donald Trump plans for tomorrow, if you have a remortgage coming a few months down the track, it’s a good idea to secure a rate as early as possible. That way, if rates rise in the interim, you’ve locked in a cheaper deal, and if they fall, you can shop around for something better closer to the time.”
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