The Bank of England (BoE) has announced it is keeping the base interest rate at 0.1%.

This comes after UK GDP fell by 2.9% in January to leave GDP around 10% below its 2019 Q4 level. However, the BoE did suggest the latest fall in GDP was “less weak than expected”.

The Monetary Policy Committee (MPC) at the BoE, which sets monetary policy to meet the 2% inflation target, voted unanimously to maintain the rate at its historic low of 0.1%.

The BoE warned that the outlook for the economy, and particularly the relative movement in demand and supply during the recovery from the pandemic, remains “unusually uncertain”.

Amid continuing rumours that the Bank may at some stage consider negative interest rates, the BoE said its MPC stands ready to “take whatever additional action is necessary to achieve its remit”.

Killik & Co associate investment director, Rachel Winter, commented on the announcement: “The UK savings ratio remains at a high level because consumers are not able to go out and spend, savers will not welcome the news that interest rates are to remain at their current lows.

“Continuing low rates will disappoint savers, but they may also encourage people to spend. The long-term aim of the BoE is for these low rates to stimulate economic growth and produce long-term benefits. As we gradually move out of lockdown and continue to roll out vaccinations, consumer spending will hopefully play a vital role in reviving businesses that have suffered under the constraints of lockdown. 

“With cash savings depreciating in value due to the current combination of negligible interest rates and positive inflation, individuals should consider where their money is best kept. The financially astute will look for alternative ways to increase the returns on their savings. For those able to take on the risk, investing in the stock market will offer protection against inflation.”

The BoE’s next vote on the bank rate is due on 6 May 2021.

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