Britain’s inflation rate has dropped to its lowest point since March 2025, with economists forecasting further declines by April. Markets now reflect an 86% probability of a base rate reduction at the Bank of England’s Monetary Policy Committee meeting on March 19. Financial advisors recommend that savers act swiftly to secure current high returns before providers adjust downward.
Antonia Medlicott, managing director of financial education firm Investing Insiders, cautions that delaying action risks substantial losses for millions of households. She states: “Savers should act now to ensure they’re not repeating the same mistake too many UK savers made last year when they lost billions in purchasing power by leaving their money in accounts paying below-inflation interest rates. Too many people forget that if inflation is higher than their interest rate, their money is losing value.”
Competitive options abound, particularly online, where rates exceed 4%. Medlicott advises: “There are plenty of accounts with good rates to take advantage of. Be prepared to look online for the best rates; the high street is rarely where you’ll find them. It’s important to make your money work hard for itself. There are plenty of competitive rates over 4% right now, so don’t settle for less.”
Rate Cuts Could Close the Window Quickly
A base rate reduction in March would prompt banks to lower savings account interest promptly to safeguard margins. Medlicott warns: “If the base rate is cut in March, then banks will lower interest rates on savings accounts quickly to protect themselves, which could leave millions of Brits out of pocket long-term by failing to make one smart move with their finances.”
Even modest rate drops compound over time. For instance, £20,000 at 4.5% yields £900 annually, but at 3.5%, it falls to £700—a £200 shortfall in one year. Larger sums or extended periods amplify losses into thousands of pounds.
ISA Allowance Deadline Looms
Savers face a £20,000 annual ISA limit, with just two opportunities remaining before anticipated regulatory shifts. Medlicott urges: “Savers have two £20,000 allowance deadlines left before the rules change. So, if you haven’t already used this year’s full ISA allowance, and cash is the right option for you, it makes sense to save every penny possible into a tax-free environment while you can.”
ISA interest escapes income tax, benefiting higher-rate taxpayers most. While cash ISAs provide stability, Medlicott notes potential for superior gains elsewhere. She explains: “ISA providers often offer better fixed-term deals than normal savings accounts, and interest earned is also tax-free. If you want a greater return on your savings, you could consider investing in a Stocks and Shares ISA. This invests your money in the market, which comes with more risk but offers more reward. From February 2024 to February 2025, the average growth for a Stocks & Shares ISA was 11.86%, compared with 3.8% for a Cash ISA.”
