"As interest rates continue to fall in the United Kingdom, Cash ISA rates are beginning to fall closer to the rate of inflation, increasing the risk of real-term losses for savers. Recent forecasts have suggested that the Bank of England is likely to cut interest rates in December and again in Q1 2026, in a move that would see the base rate cut to 3.50% in the new year."
"If you're a Cash ISA holder, don't panic. The most important thing to keep in mind as interest rates fall is that they often happen as a result of good news. In the case of the prospective cuts in the weeks and months ahead, the good news is that inflation appears to be falling. Optimism is growing for interest rate cuts because October's inflation data eased from 3.8% to 3.6%, setting the United Kingdom on a downward trajectory that will ease the pressure on the economy."
Forecasts point to Bank of England rate cuts in December and again in Q1 2026, reducing the base rate toward 3.50%. Cash ISA rates, which are linked to the base rate, are already moving closer to the rate of inflation, raising the prospect of real-term losses for savers. Nearly 9.94 million UK residents subscribed to Cash ISAs in 2023/24, a seven-year high. October inflation eased from 3.8% to 3.6%, supporting expectations of rate cuts. The Bank of England forecasts inflation returning to a 2% target by 2027. ISAs aim to deliver returns above inflation to preserve real wealth.
Read at London Business News | Londonlovesbusiness.com
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