EasyMoney states that Bank of England’s decision to hold rates may benefit borrowers, but savers continue to be overlooked in the economy.

easyMoney, a leading financial institution, understands the struggles that savers are facing as the Bank of England’s Monetary Policy Committee has voted to keep the base rate at 4%. This decision has been made despite inflation being at a high of 3.8%, making it difficult for the average saver to make real returns through traditional savings accounts.

While this decision may benefit mortgage holders and businesses, it highlights the overlooked issue of savers in economic policy discussions. The conversation around interest rates is often focused on borrowers, with little attention paid to the impact on savers. This has led to a one-sided conversation where savers are consistently neglected.

The decision to hold rates at 4% may seem like a small change, but for savers earning typical returns of 3-4% on traditional easy access Cash ISA savings accounts, it represents a significant loss of wealth. This is because banks borrow from savers at lower rates and lend to borrowers at higher rates, leaving savers with unfavorable terms.

This issue is particularly concerning for retirees and pre-retirees who rely on their savings to supplement their pensions. With inflation outpacing returns, their purchasing power gradually decreases, impacting their living standards. Similarly, young savers who are trying to save for a home face extended timelines as their real returns remain minimal or negative.

With no policy solutions in sight, savers are left to take matters into their own hands. This means exploring alternative options that offer higher returns and being willing to take on more risk. Peer-to-peer lending, for example, allows investors to directly fund borrower loans and earn average annual returns of 5.4-10%, comfortably ahead of inflation.

It is clear that until economic policy gives equal consideration to savers and borrowers, individuals must advocate for themselves. This includes understanding risk-return trade-offs and being proactive in finding strategies that work for them. Savers cannot continue to accept inadequate returns as inevitable, and it is time for a change in the conversation surrounding interest rates.