UK interest rates have been at an all-time low level of 0.1% since earlier in the year when the pandemic really gripped the nation and the economy.
While interest rates were cut the Bank of England (BoE) also restarted Quantitative Easing as another method to stimulate the fragile economy. It is therefore not surprising that as we move into a second wave, with new local lockdown restrictions coming into place, an already weak economy looks set to be hit again.
With most of their bullets already fired, the BoE is exploring what they can do to further support the economy.
For the last few months, there have been suggestions that the BoE could be looking to move interest rates even lower into negative territory. Let us just stop to think about what a negative interest rate means – it means investors may no longer looking at a return on their deposit investments. They may instead be paying for your deposits to be looked after by your bank.
We will not need to wait long to find out as the next BoE meeting is on Thursday 5th November – an important date for the calendar.
If interest rates move to negative the return on cash investments is likely to be reduced again. It has already been announced by National Savings and Investment (NS&I) that it has cut the interest it pays on many of its savings accounts in November, slashing its top easy-access rate to just 0.01%.
Premium Bond holders will also have a much lower chance of winning a prize from December.
The need for financial advice and investment management support may now be greater. If you have any questions or concerns please do not hesitate to contact us, or your adviser directly.