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Brexit joy for savers: EU Referendum vote could at last lift interest rates

Economy:
Brexit joy for savers: EU Referendum vote could at last lift interest rates

LONG suffering savers could see interest rates for the first time in more than seven years after Britain's vote to Leave the European Union (EU).

Interest rates were dropped to 0.5 per cent in March 2009 amid the financial crisis and have not moved since.
Employment levels have reached record highs this year, but low inflation has helped block the Bank raising rates.
The cost of living was at just 0.3 per cent in May, as measured by the Consumer Prices Index (CPI), and has been close to zero for the past year - far short of the Bank's two per cent target.
But it's thought the weaker pound could help raise inflation in the coming months, which would in turn could trigger a rate rise from the Bank.

This could give savers a welcome boost as the average rates on easy access ISAs now sit at just 097 per cent, down from 113 per cent a year ago, according to Moneyfacts.co.uk.
Households have now been urged to prepare for a rate rise by fixing mortgages or paying off debts.
Simon Checkley, managing director of broker Private Finance, said: "Rising inflation prompted by the recent fall in Sterling is likely to force the Bank of England to increase rates in the short term.
" This means that now is a very good time to consider some of the fixed rate mortgage products in the current market.
"A sudden rate hike; however small, could leave you with unmanageable monthly payments if you do not take steps now to prepare yourself for the worst case scenario."
However if the economy starts to falter an interest rate CUT is the more likely outcome of the referendum, according to money markets.

The markets currently show an 80 per cent chance of a cut by the end of the year - and a a 15 per cent chance of UK interest rates turning negative over the course of the next year, according to Hargreaves Lansdown.
Laith Khalaf, senior analyst at the investment firm, said: "The Bank of England may soon find itself between a rock and a hard place, if the economy and inflation start pointing in different policy directions.
" That's because although the Brexit vote has increased economic uncertainty, it has also taken a toll on Sterling, which is likely to feed through into inflation because it makes imports that much more expensive.
"This raises the uncomfortable prospect for the central bank of cutting interest rates while inflation is rising, something it has proved it is willing to do in the past in order to boost the economy."

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28 June 2016, 21:04