There was a lot of expectation from financial markets for The Bank of England to raise interest rates, and the central bank was very aware of it. Still, it came as a surprise when the Monetary Policy Committee announced a unanimous decision of increasing the benchmark interest rates by 0.25 percentage points to 0.75 percent. This is only the second time the BoE has put up interest rates in a decade and has resulted in the highest rates we have seen since 2009.
With the economy steadily improving since the last meeting in May, there were plenty of indicators that a rise in the base rate might be on the cards. Only a couple of weeks ago it was reported that employment rates are at a record high of 75.7% and wages are also increasing at a modest pace and, critically, at a higher rate than inflation. Given these factors, and the fact that the current rate rise was approved unanimously, more rate rises can be expected in the near future.
Despite the fact that the increase in interest rates likely to be followed by a boost in the rates offered on many business deposit accounts, it is far from guaranteed that banks will apply this to all business savings products. What is certain is that, with an increase in rates on some products at least, the requirement for businesses to think more carefully about where they are holding their money is greater than ever.
As Felicia Meyerowitz Singh, our CEO, said yesterday:
"UK SMEs earn close to nil returns on their cash, today's unanimous rate rise signals that this will change. Midsize businesses can earn 15x their current interest on their cash - with rates rising we will see more SMEs using platforms to actively manage cash for asset generating returns across Multi-bank products."
The need for businesses to proactively manage their cash reserves is undeniable and with the Akoni platform, such companies can select and access the market’s best rates straight from one online platform. Once more, with product prompts and further rate rises on the horizon, the platform ensures that as and when new and more rewarding deposit accounts become available, businesses can continue to take advantage of these with almost zero effort.