Why interest rates were cut – Stephen Palmer of Cranwell Wealth Solutions explains

Today Mark Carney, The Governor of the Bank of England, announced a 0.5% drop in interest rates from 0.75% down to a record low of just 0.25%. Stephen Palmer, founder of Cranwell Wealth Solutions, a wealth management company with high street offices in both Heathfield and Uckfield explains what this means and how savers can try to find a more long-term solution to tackle low interest rates.

Stephen writes: “This decision has very much been due to the economic uncertainty that Coronavirus is having on worldwide markets. Mark Carney explained that while the true impact of Coronavirus on the UK economy is still yet to be determined, The Bank of England is being decisive with this measure now as a positive step towards protecting the stability of our country, people and businesses.

Such a reduction in interest rates makes borrowing for people, businesses and most importantly the government even more attractive and in times of uncertainty, investment across the board will be required. The idea of course is to encourage continued spending within our economy and the best possible cash flow for businesses.  

The news of interest rates dropping to 0.25% today will undoubtedly create a mixed reaction. On very basic terms, people with mortgages on a current variable rate will benefit the most, as well as those looking to borrow funds. However if you are a saver looking for a better return, the months ahead maybe more challenging.

For those savers among you, we recommend viewing your savings as three layers…

1) Firstly, ensuring you have sufficient emergency money accessible, such as Premium Bonds or instant access savings.

2) Then look at your next layer of cash savings being in longer term deposits to look to achieve better returns.

3) Finally your longer term money that you are unlikely to need in the next 5+ years or that you could benefit from an income from – consider how this could be invested to look to give you greater potential for returns over and above inflation.

Of course seeking the advice of a financial advisor before you make any decisions is highly recommended.”   #investment  #savings  #interestrates

Stephen Palmer, founder of Cranwell Wealth Solutions