Interest rate hold may bring some stability for borrowers and opportunities for savers

The Bank of England’s (BoE) decision to hold rates today shows it is still treading carefully despite inflation coming in flat in August. That said, a Christmas rate cut now looks likely, with markets pricing in a strong chance of a 25 basis point cut next month.

However, we don’t believe that will result in an opening of the floodgates – memories of double-digit inflation are still fresh, and the BoE will want to avoid reigniting price pressures.

For borrowers, a hold may sound disappointing, but they have benefitted from lower borrowing costs in recent weeks thanks to a price war among High Street lenders.

As for savers, today’s decision only brings temporary relief. Savings rates have been drifting down and will likely fall further if the BoE acts next month, so shopping around remains essential.

Over the long term though, investing provides the greatest potential to outpace inflation. If the Chancellor proceeds with plans to reduce the annual Cash ISA allowance, we expect more savers to look to the stock market – a move that would not only support their own returns but also help fund growth in UK businesses.