The threat of negative interest rates threatens savers.
This week a government bond auction saw British gilts sold at a negative rate for the first time, while Bank of England boss Andrew Bailey refused to rule out the rate. base below zero.
But could you end up with a negative rate on your savings account?
On this week’s podcast, Simon Lambert, Lee Boyce and Georgie Frost watch the strange world of negative rates – upside down where investors actually pay to lend money to government, banks are charged interest for the deposit funds from the Bank of England, and you’d end up being stung rather than rewarded for saving.
It’s not that there are many rewards for saving in many places right now: a This is Money survey this week found that 235 savings accounts are now paying 0.01% interest.
It’s 10p a year out of £ 1000 saved and some may prefer not to be insulted that way and ask their bank or credit union to join the six accounts where zero is paid.
The best accounts pay just over 1%, and while not much, at least savers get a real return on their money, with inflation of 0.8%.
But another warning was given that the final game of monetary policy through the mirror could be a spike in inflation. The team examines what the argument is and if it stacks up.
The base rate is 0.1 percent (and could turn negative) and bond yields are falling due to the economic destruction of the coronavirus crisis.
The leave plan is one of Chancellor Rishi Sunak’s flagship efforts to combat this, but another This is Money survey this week found that companies that took advantage of the taxpayer’s offer to pay 80% of the salary of their staff now threaten to fire them anyway.
And finally, on a lighter note, if you’re feeling brave, you might decide now that it’s time to buy a house, when house prices and confidence have taken a hit, but the realtor is allowed to tell you what others have offered?
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