For the first time since the onset of the pandemic in March 2020, the Bank of England (BoE) has cut interest rates.

The BoE’s Monetary Policy Committee (MPC) voted by a narrow majority of five to four to reduce the base rate from 5.25% to 5%.

The decision was announced yesterday afternoon, following the return of the UK consumer price inflation to the Bank’s target of 2% in May, which stayed there in June.

However, forecasts suggest that this could rise back up to around 2.75% by December before falling back to 2% again next year, and BoE Governor Andrew Bailey has cautioned consumers not to expect interest rates to fall as quickly as they rose, stating, “We need to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much.”

Whilst this news will likely see mortgage rates come down, the same is true for returns on savings accounts and money market funds.

Investment returns on cash in our Liquidity Plus portfolio remain basically unaltered at this time, but could be impacted if further rate cuts are announced.

Clients should be aware that they have a streamlined and cost-effective switch facility between investment portfolios if they wish to move to a more active investment strategy. You can request a new investment proposal at any time.